10-K – 2026-02-26 – umbf-20251231.htm

For further discussion of regulatory capital requirements, see Note 10, “Regulatory Requirements” within the Notes to Consolidated Financial Statements under Item 8.
 
Repurchase agreements are transactions involving the exchange of investment funds by the customer for securities by the Company, under an agreement to repurchase the same issues at an agreed-upon price and date. Securities sold under agreements to repurchase and federal funds purchased totaled $3.3 billion at December 31, 2025, and $2.6 billion at December 31, 2024. Repurchase agreements and federal funds purchased averaged $2.8 billion in 2025 and $2.3 billion in 2024. The Company enters into these transactions with its downstream correspondent banks, commercial customers, and various trust, mutual fund, and local government relationships.
The Company is a member bank with the FHLB of Des Moines, and through this relationship, the Company owns FHLB stock and has access to additional liquidity and funding sources through FHLB advances. The Company’s borrowing capacity is dependent upon the amount of collateral the Company places at the FHLB. As of December 31, 2025, and December 31, 2024, the Company owned $10.3 million and $10.2 million of FHLB stock, respectively.
The Company had no outstanding advances at the FHLB of Des Moines as of December 31, 2025 or December 31, 2024. As of December 31, 2025, the Company had four letters of credit outstanding with the FHLB of Des Moines to secure deposits. These letters of credit have an aggregate amount of $261.0 million and have various maturity dates through March 10, 2026. The Company's remaining borrowing capacity with the FHLB was $2.2 billion as of December 31, 2025. During 2024, the FHLB of Des Moines issued a letter of credit for $150.0 million on behalf of the Company to secure deposits. The letter of credit outstanding as of December 31, 2024 expired in January 2025 and was subsequently renewed with an expiration date in March 2025.
In addition to the borrowing capacity with the FHLB as described above, the Company had additional liquidity of $35.1 billion available via cash, unpledged bond collateral, the federal funds market, the Federal Reserve Discount Window, and the IntraFi Cash Service program as of December 31, 2025.
 
Long-term debt totaled $474.2 million at December 31, 2025, compared to $385.3 million at December 31, 2024. The increase in long-term debt in 2025 was driven by the acquisition of HTLF, which added total long-term

60

 

debt with an acquired fair value of $278.0 million at January 31, 2025, partially offset by the repayment of the Company's 2020 subordinated notes during the third quarter of 2025.
 
In September 2022, the Company issued $110.0 million in aggregate subordinated notes due in September 2032. The Company received $107.9 million, after deducting underwriting discounts and commissions and offering expenses, and used the proceeds from the offering for general corporate purposes, including, among other uses, contributing Tier 1 capital into the Bank. The subordinated notes were issued with a fixed-to-fixed rate of 6.25% and an effective rate of 6.64% due to issuance costs, with an interest rate reset date of September 2027.
 
In September 2020, the Company issued $200.0 million in aggregate subordinated notes due in September 2030. The Company received $197.7 million, after deducting underwriting discounts and commissions and offering expenses, and used the proceeds from the offering for general corporate purposes, including, among other uses, contributing Tier 1 capital into the Bank. The subordinated notes were issued with a fixed-to-fixed rate of 3.70% and an effective rate of 3.93%, due to issuance costs. During the first quarter of 2025, the Company purchased and subsequently retired $11.1 million of its 2020 subordinated notes. During the third quarter of 2025, the Company redeemed the remainder of the outstanding 2020 subordinated notes.
 
As part of the acquisition of HTLF, the Company acquired $150.0 million in aggregate subordinated notes due in September 2031. The subordinated notes have a fixed interest rate of 2.75% until September 2026, at which time the interest rate will reset quarterly. The subordinated notes had an acquired fair value of $138.8 million as of January 31, 2025.
 
The remainder of the Company’s long-term debt was assumed from the acquisitions of Marquette Financial Companies in 2015 and HTLF in 2025 and consists of debt obligations payable to 19 unconsolidated trusts that previously issued trust preferred securities. These long-term debt obligations had an aggregate contractual balance of $262.9 million and had a carrying value of $220.0 million at December 31, 2025. As of December 31, 2024, the debt obligations related to the four unconsolidated trusts acquired from Marquette had an aggregate contractual balance of $103.1 million and had a carrying value of $76.8 million. Interest rates on trust preferred securities are tied to the three-month term SOFR with spreads ranging from 133 basis points to 365 basis points and reset quarterly. The trust preferred securities have maturity dates ranging from September 2032 to September 2037. For further information on long-term debt refer to Note 9, “Borrowed Funds,” in the Notes to the Consolidated Financial Statements.
The Company has material off-balance sheet arrangements in the form of loan commitments, commercial and standby letters of credit, futures contracts and forward exchange contracts, which have maturity dates rather than payment due dates. These commitments and contingent liabilities are not required to be recorded on the Company’s balance sheet. Since commitments associated with letters of credit and lending and financing arrangements may expire unused, the amounts shown do not necessarily reflect the actual future cash funding requirements. See Table 19 below, as well as Note 15, “Commitments, Contingencies and Guarantees” in the Notes to Consolidated Financial Statements under Item 8 for detailed information and further discussion of these arrangements. Management does not anticipate any material losses from its off-balance sheet arrangements.

61

 

Table 19
COMMITMENTS, MATERIAL CASH REQUIREMENTS AND OFF-BALANCE SHEET ARRANGEMENTS (in thousands)
The table below details the commitments, material cash requirements, and off-balance sheet arrangements for the Company as of December 31, 2025 and includes principal payments only. The Company has no capital leases or long-term purchase obligations.
 

 

 

Payments due by Period

 

 

 

Total

 

 

Less than 1 year

 

 

1-3 years

 

 

3-5 years

 

 

More than 5 years

 

Material Cash Requirements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal funds purchased and repurchase agreements

 

$

3,324,938

 

 

$

3,324,938

 

 

$

—

 

 

$

—

 

 

$

—

 

Long-term debt obligations

 

 

522,896

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

522,896

 

Operating lease obligations

 

 

80,812

 

 

 

18,125

 

 

 

31,895

 

 

 

20,046

 

 

 

10,746

 

Time deposits

 

 

3,760,862

 

 

 

3,614,744

 

 

 

130,244

 

 

 

13,714

 

 

 

2,160

 

Total

 

$

7,689,508

 

 

$

6,957,807

 

 

$

162,139

 

 

$

33,760

 

 

$

535,802

 

 

 

 

Maturities due by Period

 

 

 

Total

 

 

Less than 1 year

 

 

1-3 years

 

 

3-5 years

 

 

More than 5 years

 

Commitments, Contingencies and Guarantees

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commitments to extend credit for loans (excluding credit card loans)

 

$

17,819,711

 

 

$

7,844,323

 

 

$

6,132,122

 

 

$

2,678,552

 

 

$

1,164,714

 

Commitments to extend credit under credit card loans

 

 

5,994,640

 

 

 

5,994,640

 

 

 

—

 

 

 

—

 

 

 

—

 

Commercial letters of credit

 

 

217

 

 

 

217

 

 

 

—

 

 

 

—

 

 

 

—

 

Standby letters of credit

 

 

468,384

 

 

 

353,795

 

 

 

99,002

 

 

 

14,809

 

 

 

778

 

Forward contracts

 

 

119,978

 

 

 

119,978

 

 

 

—

 

 

 

—

 

 

 

—

 

Spot foreign exchange contracts

 

 

34,233

 

 

 

34,233

 

 

 

—

 

 

 

—

 

 

 

—

 

Commitments to extend credit for securities purchased under agreements to resell

 

 

191,000

 

 

 

191,000

 

 

 

—

 

 

 

—

 

 

 

—

 

Total

 

$

24,628,163

 

 

$

14,538,186

 

 

$

6,231,124

 

 

$

2,693,361

 

 

$

1,165,492

 

 
For further discussion of capital and liquidity, see the “Quantitative and Qualitative Disclosures about Market Risk – Liquidity Risk” in Item 7A of this report.
Critical Accounting Policies and Estimates
Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses the Company’s Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The preparation of these Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to customers and suppliers, allowance for credit losses, bad debts, investments, financing operations, long-lived assets, taxes, other contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which have formed the basis for making such judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Under different assumptions or conditions, actual results may differ from the recorded estimates.
Management believes that the Company’s critical accounting policies and estimates are those relating to the allowance for credit losses and certain purchase accounting fair value estimates including the fair value of loans acquired in, and the core deposit intangibles associated with, the acquisition of HTLF.

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Allowance for Credit Losses
The Company’s ACL represents management’s judgment of the total expected losses included in the Company’s assets held at amortized cost. The Company’s process for recording the ACL is based on the evaluation of the Company’s lifetime historical loss experience, management’s understanding of the credit quality inherent in the loan portfolio, and the impact of the current economic environment, coupled with reasonable and supportable economic forecasts.

A mathematical calculation of an estimate is made to assist in determining the adequacy and reasonableness of management’s recorded ACL. To develop the estimate, the Company follows the guidelines in ASC Topic 326, Financial Instruments – Credit Losses . The estimate reserves for assets held at amortized cost, which include the Company’s loan and held-to-maturity security portfolios.

The estimation process involves the consideration of quantitative and qualitative factors relevant to the specific segmentation of loans. These factors have been established over decades of financial institution experience and include economic observation and loan loss characteristics. This process is designed to produce a lifetime estimate of the losses, at a reporting date, that is based on evaluation of historical loss experience, current economic conditions, reasonable and supportable forecasts, and the qualitative framework outlined by the Office of the Comptroller of the Currency in the published 2020 Interagency Policy Statement. This process allows management to take a holistic view of the recorded ACL reserve and ensure that all significant and pertinent information is considered in its estimate.

The Company considers a variety of factors to ensure the safety and soundness of its estimate including a strong internal control framework, extensive methodology documentation, credit underwriting standards which encompass the Company’s desired risk profile, model validation, and ratio analysis. If the Company’s total ACL estimate, as determined in accordance with the approved ACL methodology, is either outside a reasonable range based on review of economic indicators or by comparison of historical ratio analysis, the ACL estimate is an outlier and management will investigate the underlying reason(s). Based on that investigation, issues or factors that previously had not been considered may be identified in the estimation process, which may warrant adjustments to estimated credit losses.
The ending result of this process is a recorded consolidated ACL that represents management’s best estimate of the total expected losses included in the loan and held-to-maturity security portfolios considering available information, from internal and external sources, relevant to assessing exposure to credit loss over the contractual term of the instrument. While management utilizes its best judgment and information available, the ultimate adequacy of the ACL is dependent upon a variety of factors beyond the Company’s control, including the performance of its portfolios, the economy, and changes in interest rates. As such, significant downturns in circumstances relating to loan quality and economic conditions could result in a requirement for additional allowance. Likewise, an upturn in loan quality and improved economic conditions may allow a reduction in the required allowance. In either instance, unanticipated changes could have a significant impact on the Company’s Provision for credit losses and ACL reported in its Consolidated Income Statements and Consolidated Balance Sheets, respectively.
For more information on loan portfolio segments, the Company’s ACL methodology, and management’s assumptions in estimating the ACL, refer to the section captioned “Allowance for Credit Losses” within Note 3, “Loans and Allowance for Credit Losses,” in the Notes to the Consolidated Financial Statements.
Purchase Accounting Fair Value Estimates
Assets acquired and liabilities assumed in a business combination are recorded at their fair values as of the date of acquisition. The determination of estimated fair values required management to make certain estimates about discount rates, expected future cash flows, market conditions at the time of acquisition, and other future events that are highly subjective in nature and may require adjustments. The fair values for these items are further discussed in Note 1, “Summary of Significant Accounting Policies” and Note 20, “Acquisition,” in the Notes to the Consolidated Financial Statements. Fair values of loans acquired in and core deposit intangibles associated with the acquisition of HTLF are considered critical accounting estimates and are further discussed below.

63

 

Loans
The fair value for acquired loans was based on a discounted cash flow method that considered the loans’ underlying characteristics including account type, remaining terms of loans, annual interest rates or coupon, fixed or variable interest rate, past delinquencies, risk rating, timing of principal and interest payments, current market rates, loan to value ratios, loss exposure, more specifically the probability of default and loss given default, and remaining balance. Loans were aggregated according to similar characteristics when applying the valuation method.
Core Deposit Intangibles
Core deposit intangibles represent the value of relationships with deposit clients and the cost savings derived from available core deposits relative to an alternative funding source. The fair value of the core deposit intangible was estimated using a net cost savings method, a variation of the income approach. This approach considers expected client attrition rates, average life and balance inflation, alternative cost of funds, the interest cost and net maintenance cost associated with the client deposit base, and a discount rate used to discount the future economic benefits of the core deposit intangible asset to present value.
 

64

 

ITEM 7A. QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK
Risk Management
Market risk is a broad term for the risk of economic loss due to adverse changes in the fair value of a financial instrument. These changes may be the result of various factors, including interest rates, foreign exchange prices, commodity prices, or equity prices. Financial instruments that are subject to market risk can be classified either as held for trading or held for purposes other than trading.
The Company is subject to market risk primarily through the effect of changes in interest rates of its assets held for purposes other than trading. The following discussion of interest rate risk, however, combines instruments held for trading and instruments held for purposes other than trading because the instruments held for trading represent such a small portion of the Company’s portfolio that the interest rate risk associated with them is immaterial.
Interest Rate Risk
In the banking industry, a major risk exposure is changing interest rates. To minimize the effect of interest rate changes to net interest income and exposure levels to economic losses, the Company manages its exposure to changes in interest rates through asset and liability management within guidelines established by its Asset Liability Committee (ALCO) and approved by the Board. The ALCO is responsible for approving and ensuring compliance with asset/liability management policies, including interest rate exposure. The Company’s primary method for measuring and analyzing consolidated interest rate risk is the Net Interest Income Simulation Analysis. The Company also uses a Net Portfolio Value model to measure market value risk under various rate change scenarios and a gap analysis to measure maturity and repricing relationships between interest-earning assets and interest-bearing liabilities at specific points in time. On a limited basis, the Company uses hedges such as swaps, rate floors, and futures contracts to manage interest rate risk on certain loans, trading securities, trust preferred securities, and deposits. See further information in Note 17 “Derivatives and Hedging Activities” in the Notes to the Company’s Consolidated Financial Statements.
Overall, the Company attempts to manage interest rate risk by positioning the balance sheet to maximize net interest income while maintaining an acceptable level of interest rate and credit risk, remaining mindful of the relationship among profitability, liquidity, interest rate risk and credit risk.
Net Interest Income Modeling
The Company’s primary interest rate risk tool, the Net Interest Income Simulation Analysis, measures interest rate risk and the effect of interest rate changes on net interest income and net interest margin. This analysis incorporates all of the Company’s assets and liabilities together with assumptions that reflect the current interest rate environment. Through these simulations, management estimates the impact on net interest income of a 200-basis-point upward or a 300-basis-point downward gradual change (e.g. ramp) and immediate change (e.g. shock) of market interest rates over a two-year period. In ramp scenarios, rates change gradually for a one-year period and remain constant in year two. In shock scenarios, rates change immediately and the change is sustained for the remainder of the two year scenario horizon. Assumptions are made to project rates for new loans and deposits based on historical analysis, management outlook and repricing strategies. Asset prepayments and other market risks are developed from industry estimates of prepayment speeds and other market changes. The results of these simulations can be significantly influenced by assumptions utilized and management evaluates the sensitivity of the simulation results on a regular basis.

65

 

Table 20 shows the net interest income percentage increase or decrease over the next twelve- and twenty-four-month periods as of December 31, 2025 and 2024 based on hypothetical changes in interest rates and a constant sized balance sheet with runoff being replaced.
Table 20
MARKET RISK
 

 

 

Hypothetical change in interest rate – Rate Ramp

 

 

 

Year One

 

 

Year Two

 

 

 

December 31,
2025

 

 

December 31,
2024

 

 

December 31,
2025

 

 

December 31,
2024

 

(basis points)

 

Percentage change

 

 

Percentage change

 

 

Percentage change

 

 

Percentage change

 

200

 

 

(2.0

)%

 

 

(3.9

)%

 

 

3.8

%

 

 

1.3

%

100

 

 

(1.1

)

 

 

(2.3

)

 

 

1.3

 

 

 

(0.2

)

Static

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

(100)

 

 

1.8

 

 

 

3.0

 

 

 

(0.9

)

 

 

0.7

 

(200)

 

 

3.5

 

 

 

6.1

 

 

 

(2.3

)

 

 

1.6

 

(300)

 

 

5.6

 

 

 

9.1

 

 

 

(2.8

)

 

 

1.5

 

 

 

 

Hypothetical change in interest rate – Rate Shock

 

 

 

Year One

 

 

Year Two

 

 

 

December 31,
2025

 

 

December 31,
2024

 

 

December 31,
2025

 

 

December 31,
2024

 

(basis points)

 

Percentage change

 

 

Percentage change

 

 

Percentage change

 

 

Percentage change

 

200

 

 

0.2

%

 

 

(2.7

)%

 

 

5.0

%

 

 

3.0

%

100

 

 

(0.9

)

 

 

(2.3

)

 

 

1.7

 

 

 

0.6

 

Static

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

(100)

 

 

1.2

 

 

 

3.4

 

 

 

(1.9

)

 

 

(0.4

)

(200)

 

 

2.0

 

 

 

6.8

 

 

 

(4.7

)

 

 

(0.7

)

(300)

 

 

3.6

 

 

 

9.1

 

 

 

(6.9

)

 

 

(2.3

)

 
The Company is positioned relatively neutral to changes in interest rates in the next year. Net interest income is predicted to increase in the 200-basis-point upward shock scenario. Net interest income is predicted to decrease in the 100-basis-point upward shock scenario and all upward rate ramp scenarios. In down rate scenarios net interest income is predicted to increase in all scenarios. In year two, net interest income is predicted to increase in all rising rate scenarios and decrease in all falling rate scenarios. The Company’s ability to price deposits consistent with its historical approach is a key assumption in these scenarios.
Repricing Mismatch Analysis
The Company also evaluates its interest rate sensitivity position in an attempt to maintain a balance between the amount of interest-bearing assets and interest-bearing liabilities which are expected to mature or reprice at any point in time. While a traditional repricing mismatch analysis (gap analysis) provides a snapshot of interest rate risk, it does not take into consideration that assets and liabilities with similar repricing characteristics may not, in fact, reprice at the same time or the same degree. Also, it does not necessarily predict the impact of changes in general levels of interest rates on net interest income.

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Table 21 is a static gap analysis, which presents the Company’s assets and liabilities, based on their repricing or maturity characteristics and reflecting principal amortization. Table 22 presents the break-out of fixed and variable rate loans by repricing or maturity characteristics for each loan class.
Table 21
INTEREST RATE SENSITIVITY ANALYSIS (in millions)
 

 

 

1-90

 

 

91-180

 

 

181-365

 

 

 

 

 

1-5

 

 

Over 5

 

 

 

 

 

 

Days

 

 

Days

 

 

Days

 

 

Total

 

 

Years

 

 

Years

 

 

Total

 

December 31, 2025 Earning assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

26,031.2

 

 

$

1,032.1

 

 

$

1,528.2

 

 

$

28,591.5

 

 

$

8,166.9

 

 

$

2,023.0

 

 

$

38,781.4

 

Securities

 

 

1,459.5

 

 

 

628.7

 

 

 

1,058.9

 

 

 

3,147.1

 

 

 

7,832.0

 

 

 

9,130.6

 

 

 

20,109.7

 

Federal funds sold and resell agreements

 

 

1,548.1

 

 

 

—

 

 

 

—

 

 

 

1,548.1

 

 

 

—

 

 

 

—

 

 

 

1,548.1

 

Other

 

 

6,962.9

 

 

 

—

 

 

 

—

 

 

 

6,962.9

 

 

 

—

 

 

 

—

 

 

 

6,962.9

 

Total earning assets

 

$

36,001.7

 

 

$

1,660.8

 

 

$

2,587.1

 

 

$

40,249.6

 

 

$

15,998.9

 

 

$

11,153.6

 

 

$

67,402.1

 

% of total earning assets

 

 

53.4

%

 

 

2.5

%

 

 

3.8

%

 

 

59.7

%

 

 

23.7

%

 

 

16.6

%

 

 

100.0

%

Funding sources

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing demand and savings

 

$

39,752.6

 

 

$

—

 

 

$

—

 

 

$

39,752.6

 

 

$

—

 

 

$

—

 

 

$

39,752.6

 

Time deposits

 

 

2,106.9

 

 

 

749.0

 

 

 

758.8

 

 

 

3,614.7

 

 

 

144.0

 

 

 

2.2

 

 

 

3,760.9

 

Federal funds purchased and repurchase agreements

 

 

3,324.9

 

 

 

—

 

 

 

—

 

 

 

3,324.9

 

 

 

—

 

 

 

—

 

 

 

3,324.9

 

Long term debt

 

 

220.0

 

 

 

—

 

 

 

144.9

 

 

 

364.9

 

 

 

109.3

 

 

 

—

 

 

 

474.2

 

Noninterest-bearing sources

 

 

17,143.4

 

 

 

—

 

 

 

—

 

 

 

17,143.4

 

 

 

—

 

 

 

2,946.1

 

 

 

20,089.5

 

Total funding sources

 

$

62,547.8

 

 

$

749.0

 

 

$

903.7

 

 

$

64,200.5

 

 

$

253.3

 

 

$

2,948.3

 

 

$

67,402.1

 

% of total earning assets

 

 

92.8

%

 

 

1.1

%

 

 

1.3

%

 

 

95.2

%

 

 

0.4

%

 

 

4.4

%

 

 

100.0

%

Interest sensitivity gap

 

$

(26,546.1

)

 

$

911.8

 

 

$

1,683.4

 

 

$

(23,950.9

)

 

$

15,745.6

 

 

$

8,205.3

 

 

 

 

Cumulative gap

 

 

(26,546.1

)

 

 

(25,634.3

)

 

 

(23,950.9

)

 

 

(23,950.9

)

 

 

(8,205.3

)

 

 

—

 

 

 

 

As a % of total earning assets

 

 

(39.4

)%

 

 

(38.0

)%

 

 

(35.5

)%

 

 

(35.5

)%

 

 

(12.2

)%

 

 

—

%

 

 

 

Ratio of earning assets to funding sources

 

 

0.58

 

 

 

2.22

 

 

 

2.86

 

 

 

0.63

 

 

 

63.16

 

 

 

3.78

 

 

 

 

Cumulative ratio of earning assets to funding sources

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2025

 

 

0.58

 

 

 

0.60

 

 

 

0.63

 

 

 

0.63

 

 

 

0.87

 

 

 

1.00

 

 

 

 

2024

 

 

0.58

 

 

 

0.60

 

 

 

0.62

 

 

 

0.62

 

 

 

0.87

 

 

 

1.00

 

 

 

 

 

67

 

Table 22
Maturities and Sensitivities to Changes in Interest Rates
This table details loan maturities by variable and fixed rates as of December 31, 2025 (in thousands):
 

 

 

Due in one year or less

 

 

Due after one year through five years

 

 

Due after five years through fifteen years

 

 

Due after fifteen years

 

 

Total

 

Variable Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

$

12,796,916

 

 

$

125,919

 

 

$

8,951

 

 

$

—

 

 

$

12,931,786

 

Specialty lending

 

 

518,237

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

518,237

 

Commercial real estate

 

 

9,982,792

 

 

 

504,883

 

 

 

11,094

 

 

 

—

 

 

 

10,498,769

 

Consumer real estate

 

 

1,057,762

 

 

 

733,182

 

 

 

243,066

 

 

 

—

 

 

 

2,034,010

 

Consumer

 

 

174,272

 

 

 

114

 

 

 

—

 

 

 

—

 

 

 

174,386

 

Credit cards

 

 

700,525

 

 

 

208

 

 

 

—

 

 

 

—

 

 

 

700,733

 

Leases and other

 

 

213,745

 

 

 

1,036

 

 

 

—

 

 

 

—

 

 

 

214,781

 

Total variable rate loans

 

 

25,444,249

 

 

 

1,365,342

 

 

 

263,111

 

 

 

—

 

 

 

27,072,702

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

 

868,424

 

 

 

2,309,459

 

 

 

160,809

 

 

 

42

 

 

 

3,338,734

 

Specialty lending

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Commercial real estate

 

 

1,647,823

 

 

 

3,473,889

 

 

 

749,788

 

 

 

5,970

 

 

 

5,877,470

 

Consumer real estate

 

 

592,037

 

 

 

970,589

 

 

 

682,562

 

 

 

159,300

 

 

 

2,404,488

 

Consumer

 

 

31,742

 

 

 

32,181

 

 

 

502

 

 

 

—

 

 

 

64,425

 

Credit cards

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Leases and other

 

 

7,271

 

 

 

15,476

 

 

 

871

 

 

 

1

 

 

 

23,619

 

Total fixed rate loans

 

 

3,147,297

 

 

 

6,801,594

 

 

 

1,594,532

 

 

 

165,313

 

 

 

11,708,736

 

Total loans and loans held for sale

 

$

28,591,546

 

 

$

8,166,936

 

 

$

1,857,643

 

 

$

165,313

 

 

$

38,781,438

 

 
Trading Account
The Company carries securities in a trading account that is maintained in accordance with Board-approved policy and procedures. The policy limits the amount and type of securities that can be carried in the trading account and requires compliance with any limits under applicable law and regulations, and mandates the use of a value-at-risk methodology to manage price volatility risks within financial parameters. The risk associated with the carrying of trading securities is offset by utilizing financial instruments including exchange-traded financial futures as well as short sales of U.S. Treasury and Corporate securities. The trading securities and related hedging instruments are marked-to-market daily. The trading account had a balance of $22.3 million as of December 31, 2025, compared to $28.5 million as of December 31, 2024. Securities sold not yet purchased (i.e., short positions) totaled $4.1 million at December 31, 2025 and $7.1 million at December 31, 2024 and are classified within the Other liabilities line of the Company's Consolidated Balance Sheets.
The Company is subject to market risk primarily through the effect of changes in interest rates of its assets held for purposes other than trading. The discussion in Table 21 above of interest rate risk, however, combines instruments held for trading and instruments held for purposes other than trading, because the instruments held for trading represent such a small portion of the Company’s portfolio that the interest rate risk associated with them is immaterial.
Other Market Risk
The Company has minimal foreign currency risk as a result of foreign exchange contracts. See Note 10, “Commitments, Contingencies and Guarantees” in the Notes to the Consolidated Financial Statements.
Credit Risk Management
Credit risk represents the risk that a customer or counterparty may not perform in accordance with contractual terms. The Company utilizes a centralized credit administration function, which provides information on the Bank’s

68

 

risk levels, delinquencies, an internal risk grading system and overall credit exposure. Loan requests are centrally reviewed to ensure the consistent application of the loan policy and standards. In addition, the Company has an internal loan review staff that operates independently of the Bank. This review team performs periodic examinations of the Bank’s loans for credit quality, documentation and loan administration. The respective regulatory authority of the Bank also reviews loan portfolios.
A primary indicator of credit quality and risk management is the level of nonperforming loans. Nonperforming loans include both nonaccrual loans and restructured loans on nonaccrual. The Company’s nonperforming loans increased $125.4 million to $144.7 million at December 31, 2025, compared to December 31, 2024. The increase is attributable to additional non-performing loans related to the acquisition of HTLF. There was an immaterial amount of interest recognized on nonperforming loans during 2025, 2024, and 2023.
The Company had $4.8 million and $1.6 million of other real estate owned as of December 31, 2025 and December 31, 2024, respectively. Other repossessed assets totaled $26.8 million as of December 31, 2024. Loans past due more than 90 days and still accruing interest totaled $18.4 million as of December 31, 2025, compared to $7.6 million as of December 31, 2024.
A loan is generally placed on nonaccrual status when payments are past due 90 days or more and/or when management has considerable doubt about the borrower’s ability to repay on the terms originally contracted. The accrual of interest is discontinued and recorded thereafter only when actually received in cash.
Certain loans are restructured to provide a reduction or deferral of interest or principal due to deterioration in the financial condition of the respective borrowers. The Company had $169 thousand of restructured loans at December 31, 2025 and $196 thousand at December 31, 2024.
Table 23
LOAN QUALITY (in thousands)
 

 

 

December 31,

 

 

 

2025

 

 

2024

 

Nonaccrual loans

 

$

144,640

 

 

$

19,241

 

Restructured loans on nonaccrual

 

 

26

 

 

 

41

 

Total non-performing loans

 

 

144,666

 

 

 

19,282

 

Other real estate owned

 

 

4,800

 

 

 

1,612

 

Other repossessed assets

 

 

—

 

 

 

26,779

 

Total non-performing assets

 

$

149,466

 

 

$

47,673

 

 

 

 

 

 

 

Loans past due 90 days or more

 

$

18,403

 

 

$

7,602

 

Restructured loans accruing

 

 

143

 

 

 

155

 

Allowance for credit losses on loans

 

 

419,478

 

 

 

259,089

 

Ratios

 

 

 

 

 

 

Non-performing loans as a % of loans

 

 

0.37

%

 

 

0.08

%

Non-performing assets as a % of loans plus other real estate owned and other repossessed assets

 

 

0.39

 

 

 

0.19

 

Non-performing assets as a % of total assets

 

 

0.20

 

 

 

0.09

 

Loans past due 90 days or more as a % of loans

 

 

0.05

 

 

 

0.03

 

Allowance for credit losses on loans as a % of loans

 

 

1.08

 

 

 

1.01

 

Allowance for credit losses on loans as a multiple of non-performing loans

 

2.90x

 

 

13.44x

 

 

69

 

Table 24
SUMMARY OF NET CHARGE-OFFS (in thousands)
 

 

 

2025

 

 

2024

 

 

 

Net Charge-Offs (Recoveries)

 

 

Average Loans Outstanding

 

 

Net Charge-Offs (Recoveries) to Average Loans Outstanding

 

 

Net Charge-Offs (Recoveries)

 

 

Average Loans Outstanding

 

 

Net Charge-Offs (Recoveries) to Average Loans Outstanding

 

At December 31:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

$

44,138

 

 

$

14,437,140

 

 

 

0.31

%

 

$

3,551

 

 

$

10,169,805

 

 

 

0.03

%

Specialty lending

 

 

—

 

 

 

549,409

 

 

 

—

 

 

 

(4

)

 

 

497,301

 

 

 

(0.00

)

Commercial real estate

 

 

11,596

 

 

 

15,789,274

 

 

 

0.07

 

 

 

250

 

 

 

9,517,745

 

 

 

0.00

 

Consumer real estate

 

 

1,766

 

 

 

4,188,867

 

 

 

0.04

 

 

 

(216

)

 

 

3,036,136

 

 

 

(0.01

)

Consumer real estate

 

 

2,693

 

 

 

254,889

 

 

 

1.06

 

 

 

1,283

 

 

 

166,278

 

 

 

0.77

 

Credit cards

 

 

22,157

 

 

 

744,939

 

 

 

2.97

 

 

 

18,397

 

 

 

587,958

 

 

 

3.13

 

Leases and other

 

 

21

 

 

 

101,435

 

 

 

0.02

 

 

 

1

 

 

 

234,324

 

 

 

0.00

 

Total

 

$

82,371

 

 

$

36,065,953

 

 

 

0.23

%

 

$

23,262

 

 

$

24,209,547

 

 

 

0.10

%

 
Net charge-offs for the year ended December 31, 2025 were $82.4 million, compared to $23.3 million for the year ended December 31, 2024.
Liquidity Risk
Liquidity represents the Company’s ability to meet financial commitments through the maturity and sale of existing assets or availability of additional funds. The Company believes that the most important factor in the preservation of liquidity is maintaining public confidence that facilitates the retention and growth of a large, stable supply of core deposits and wholesale funds. Ultimately, the Company believes public confidence is generated through profitable operations, sound credit quality and a strong capital position. The primary source of liquidity for the Company is regularly scheduled payments on and maturity of assets, which include $13.7 billion of high-quality securities available for sale. The liquidity of the Company and the Bank is also enhanced by its activity in the federal funds market and by its core deposits. Additionally, management believes it can raise debt or equity capital on favorable terms in the future, should the need arise.
Another factor affecting liquidity is the amount of deposits and customer repurchase agreements that have pledging requirements. All customer repurchase agreements require collateral in the form of a security. The U.S. Government, other public entities, and certain trust depositors require the Company to pledge securities if their deposit balances are greater than the FDIC-insured deposit limitations. These pledging requirements affect liquidity risk in that the related security cannot otherwise be disposed due to the pledging restriction. At December 31, 2025, $13.4 billion, or 68.8%, of securities were pledged or used as collateral, compared to $10.5 billion, or 80.1%, at December 31, 2024.
The Company also has other commercial commitments that may impact liquidity. These commitments include unused commitments to extend credit, standby letters of credit and financial guarantees, and commercial letters of credit. The total amount of these commercial commitments at December 31, 2025 was $24.3 billion. Since many of these commitments expire without being drawn upon, the total amount of these commercial commitments does not necessarily represent the future cash requirements of the Company.
The Company’s cash requirements consist primarily of dividends to shareholders, debt service, operating expenses, and treasury stock purchases. Management fees and dividends received from bank and non-bank subsidiaries traditionally have been sufficient to satisfy these requirements and are expected to be sufficient in the future. The declaration and payment of dividends to shareholders, as well as the amount thereof, are subject to the discretion of the Board and depend on the Company’s results of operations, financial condition, capital levels, cash requirements, future prospects, regulatory requirements and other factors deemed relevant by the Board. There can be no assurance the Company will declare and pay dividends to shareholders. The Bank is subject to various rules regarding payment of dividends to the Company. For the most part, the Bank can pay dividends at least equal to its current year’s earnings without seeking prior regulatory approval. The Company also uses cash to inject capital into the Bank and its non-Bank subsidiaries to maintain adequate capital as well as to fund strategic initiatives.

70

 

In September 2022, the Company issued $110.0 million in aggregate subordinated notes due in September 2032. The Company received $107.9 million, after deducting underwriting discounts and commissions and offering expenses, and used the proceeds from the offering for general corporate purposes, including, among other uses, contributing Tier 1 capital into the Bank. The subordinated notes were issued with a fixed-to-fixed rate of 6.25% and an effective rate of 6.64%, due to issuance costs, with an interest rate reset date of September 2027.

In September 2020, the Company issued $200.0 million in aggregate subordinated notes due in September 2030. The Company received $197.7 million, after deducting underwriting discounts and commissions and offering expenses, and used the proceeds from the offering for general corporate purposes, including, among other uses, contributing Tier 1 capital into the Bank. The subordinated notes were issued with a fixed-to-fixed rate of 3.70% and an effective rate of 3.93%, due to issuance costs. During the first quarter of 2025, the Company purchased and subsequently retired $11.1 million of its 2020 subordinated notes. During the third quarter of 2025, the Company redeemed the remainder of the outstanding 2020 subordinated notes.
 
As part of the acquisition of HTLF, the Company acquired $150.0 million in aggregate subordinated notes due September 2031. The subordinated notes have a fixed interest rate of 2.75% until September 2026, at which time the interest rate will reset quarterly. The subordinated notes had an acquired fair value of $138.8 million as of January 31, 2025.
The Company is a member bank with the FHLB of Des Moines, and through this relationship, the Company owns FHLB stock and has access to additional liquidity and funding sources through FHLB advances. The Company’s borrowing capacity is dependent upon the amount of collateral the Company places at the FHLB. As of December 31, 2025, and December 31, 2024, the Company owned $10.3 million and $10.2 million of FHLB stock, respectively.
The Company had no outstanding advances at the FHLB of Des Moines as of December 31, 2025 or December 31, 2024. As of December 31, 2025, the Company had four letters of credit outstanding with the FHLB of Des Moines to secure deposits. These letters of credit have an aggregate amount of $261.0 million and have various maturity dates through March 10, 2026. The Company's remaining borrowing capacity with the FHLB was $2.2 billion as of December 31, 2025. During 2024, the FHLB of Des Moines issued a letter of credit for $150.0 million on behalf of the Company to secure deposits. The letter of credit outstanding as of December 31, 2024 expired in January 2025 and was subsequently renewed with an expiration date in March 2025.
In addition to the borrowing capacity with the FHLB as described above, the Company had additional liquidity of $35.1 billion available via cash, unpledged bond collateral, the federal funds market, the Federal Reserve Discount Window, and the IntraFi Cash Service program as of December 31, 2025.
Operational Risk
Operational risk generally refers to the risk of loss resulting from the Company’s operations, including those operations performed for the Company by third parties. This would include but is not limited to the risk of fraud by employees or persons outside the Company, the execution of unauthorized transactions by employees or others, errors relating to transaction processing, breaches of the internal control system and compliance requirements, and unplanned interruptions in service. This risk of loss also includes the potential legal or regulatory actions that could arise as a result of an operational deficiency, or as a result of noncompliance with applicable regulatory standards.
The Company operates in many markets and relies on the ability of its employees and systems to properly process a high number of transactions. In the event of a breakdown in internal control systems, improper operation of systems or improper employee actions, the Company could suffer financial loss, face regulatory action and suffer damage to its reputation. In order to address this risk, management maintains a system of internal controls with the objective of providing proper transaction authorization and execution, safeguarding of assets from misuse or theft, and ensuring the reliability of financial and other data.
The Company maintains systems of internal controls that provide management with timely and accurate information about the Company’s operations. These systems have been designed to manage operational risk at appropriate levels given the Company’s financial strength, the environment in which it operates, and considering factors such as competition and regulation. The Company has also established procedures that are designed to ensure that policies relating to conduct, ethics and business practices are followed on a uniform basis. In certain cases, the Company has experienced losses from operational risk. Such losses have included the effects of operational errors

71

 

that the Company has discovered and included as expense in the statement of income. While there can be no assurance that the Company will not suffer such losses in the future, management continually monitors and works to improve its internal controls, systems and corporate-wide processes and procedures.

72

 

ITEM 8. FINANCIAL STATEMEN TS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors
UMB Financial Corporation:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of UMB Financial Corporation and subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 26, 2026 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Allowance for credit losses on certain loans evaluated on a collective basis
As discussed in Notes 1 and 3 to the consolidated financial statements, the Company’s total allowance for credit losses on loans was $419.5 million as of December 31, 2025, a substantial portion of which related to the allowance for credit losses for loans evaluated on a collective basis for the commercial and industrial and commercial real estate segments (the collective ACL). The collective ACL includes the measure of expected credit losses on a pool basis for loans where similar risk characteristics exist and is determined using relevant available information from internal and external sources related to historical credit loss experience, current

73

 

conditions, and reasonable and supportable economic forecasts. The Company uses probability of default (PD) and loss given default (LGD) models for the commercial and industrial and commercial real estate segments. For the commercial and industrial segment, the collective ACL is calculated by modeling PD over future periods multiplied by historical LGD multiplied by contractual exposure at default minus any estimated prepayments and charge offs. For the commercial real estate segment, the collective ACL is calculated by modeling PD over future periods based on peer bank data. The PD loss rate is then multiplied by historical LGD multiplied by contractual exposure at default minus any estimated prepayments and charge offs. Primary risk drivers are segment specific and include macro-economic variables and risk ratings of the individual loans within the commercial and industrial and commercial real estate loan segments. After the reasonable and supportable forecast periods, the Company reverts to historical loss experience for each portfolio using a cliff or straight-line reversion method. A portion of the collective ACL is comprised of qualitative factors which represent adjustments to historical loss experience.
We identified the assessment of the collective ACL as a critical audit matter. A high degree of audit effort, including specialized skills and knowledge, and subjective and complex auditor judgment was involved in the assessment of the collective ACL. Specifically, the assessment encompassed the evaluation of the collective ACL methodology, including the methods and models used to estimate (1) the PD and LGD and historical loss rates and their significant assumptions, including average prepayment rates, the economic forecast scenario, macro-economic variables, the reasonable and supportable forecast periods, lengths of time and methods of reversion, and risk ratings, and (2) the qualitative factors and their significant assumptions. The assessment also included an evaluation of the conceptual soundness and performance of the PD and LGD and historical loss rate models.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the measurement of the collective ACL, including controls related to the:
• design of the collective ACL methodology

• continued use of the PD and LGD and historical loss rate models

• determination and measurement of the significant assumptions used in the PD and LGD and historical loss rate models

• continued use of the qualitative factors

• performance monitoring of the PD and LGD and historical loss rate models

• analysis of the overall ACL results, trends, and ratios

• risk ratings assigned to loans.

We evaluated the Company’s process to develop the collective ACL estimate by testing certain sources of data, factors, and assumptions that the Company used, and considered the relevance and reliability of such data, factors, and assumptions. In addition, we involved credit risk professionals with specialized skills and knowledge, who assisted in:
• evaluating the Company’s collective ACL methodology for compliance with U.S. generally accepted accounting principles

• evaluating judgments made by the Company relative to the continued use and performance monitoring of the PD and LGD and historical loss rate models by comparing them to relevant Company specific metrics and trends and the applicable industry and regulatory practices

• assessing the conceptual soundness and performance testing of the PD and LGD and historical loss rate models by inspecting the model documentation to determine whether the models are suitable for their intended use

• evaluating the methodology used to develop the economic forecast scenario and underlying assumptions by comparing it to the Company’s business environment and relevant industry practices

• testing the historical credit cycle period and evaluating the length of the reasonable and supportable forecast period by comparing to specific portfolio risk characteristics and trends

74

 

• testing individual risk ratings for a selection of commercial and industrial and commercial real estate loans by evaluating the financial performance of the borrower, sources of repayment, and any relevant guarantees or underlying collateral

• evaluating the methodology used to develop the qualitative factors and the effect of those factors on the collective ACL compared with relevant credit risk factors and consistency with credit trends and identified limitations of the underlying quantitative models.

Fair value measurement of acquired loans and the core deposit intangible in the acquisition of Heartland Financial USA, Inc. (HTLF)
As discussed in Note 20 to the consolidated financial statements, on January 31, 2025, the Company completed its acquisition of Heartland Financial USA, Inc. The transaction was accounted for as a business combination and the assets acquired and liabilities assumed are required to be measured at fair value at the date of acquisition under the purchase method of accounting. The Company acquired loans with a fair value of $9.8 billion and established a core deposit intangible (CDI) asset with a fair value of $474.1 million. The fair value of the acquired loans is based on a discounted cash flow method that considered the loans’ underlying characteristics including account type, remaining terms of loan, annual interest rates or coupon, fixed or variable interest rates, past delinquencies, risk ratings, timing of principal and interest payments, current market rates, loan to value ratios, loss exposure, more specifically the probability of default and loss given default, and remaining balance. The fair value of the CDI asset is estimated using a net cost savings method, a variation of the income approach. This approach considers expected client attrition rates, average life and balance inflation, alternative cost of funds, the interest cost and net maintenance cost associated with the client deposit base, and a discount rate used to discount the future economic benefits of the core deposit intangible asset to present value.
We identified the evaluation of the fair value measurement of the acquired loans and CDI asset as a critical audit matter. A high degree of audit effort, including specialized skills and knowledge, and subjective and complex auditor judgment was involved in the assessment of the fair value measurements due to significant measurement uncertainty. Specifically, the assessment of the fair value measurements involved an evaluation of the valuation methods and certain assumptions, including the risk ratings, probability of default rates, and loss given default rates for the acquired loans; and the expected client attrition rates for the CDI asset. Changes in the assumptions could have a significant impact on the estimated fair values.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the fair value measurement of the acquired loans and the CDI asset, including controls related to the:
• development of the valuation methods

• determination of the risk ratings, probability of default rates, and loss given default rates for the acquired loans

• determination of the expected client attrition rates for the CDI asset.

We evaluated the Company’s process to develop the fair values of the acquired loans and the CDI asset by testing certain sources of data and assumptions that the Company used and considered the relevance and reliability of such data and assumptions. We involved valuation and credit risk professionals with specialized skills and knowledge, who assisted in evaluating the valuation methods used by the Company to estimate the fair values of acquired loans and CDI asset for compliance with U.S. generally accepted accounting principles:
Specific to the acquired loans:
• developing independent ranges of fair value for acquired loans, including the development of independent assumptions for probability of default rates and loss given default rates

• assessing the Company’s estimate of fair value for acquired loans by comparing them to the independently developed ranges

• testing individual risk ratings for a selection of acquired loans by evaluating the financial performance of the borrower, sources of repayment, and any relevant guarantees or underlying collateral.

75

 

Specific to the CDI asset:
• evaluating the expected client attrition rates by comparing historical experience and the specific facts and circumstances of the acquisition to market information from third-party sources.

/s/ KPMG LLP
We have served as the Company’s auditor since 2014.
Kansas City, Missouri
February 26, 2026

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UMB FINANCIAL CORPORATION
CONSOLIDATED B ALANCE SHEETS
(dollars in thousands, except share and per share data)
 

 

 

December 31,

 

 

 

2025

 

 

2024

 

ASSETS

 

 

 

 

 

 

Loans

 

$

38,779,408

 

 

$

25,642,301

 

Allowance for credit losses on loans

 

 

( 419,478

)

 

 

( 259,089

)

Net loans

 

 

38,359,930

 

 

 

25,383,212

 

Loans held for sale

 

 

2,030

 

 

 

2,756

 

Securities:

 

 

 

 

 

 

Available for sale (amortized cost of $ 13,999,900  and $ 8,407,676 , respectively)

 

 

13,709,141

 

 

 

7,774,334

 

Held to maturity, net of allowance for credit losses of $ 1,684  and $ 2,645 , respectively (fair value of $ 5,250,465  and $ 4,748,938 , respectively)

 

 

5,722,543

 

 

 

5,376,267

 

Trading securities

 

 

22,331

 

 

 

28,533

 

Other securities

 

 

676,300

 

 

 

471,018

 

Total securities

 

 

20,130,315

 

 

 

13,650,152

 

Federal funds sold and securities purchased under agreements to resell

 

 

1,548,093

 

 

 

545,000

 

Interest-bearing due from banks

 

 

6,940,535

 

 

 

7,986,270

 

Cash and due from banks

 

 

952,547

 

 

 

573,175

 

Premises and equipment, net

 

 

398,271

 

 

 

221,773

 

Accrued income

 

 

349,639

 

 

 

246,095

 

Goodwill

 

 

1,839,825

 

 

 

207,385

 

Other intangibles, net

 

 

486,869

 

 

 

63,647

 

Other assets

 

 

2,086,036

 

 

 

1,530,199

 

Total assets

 

$

73,094,090

 

 

$

50,409,664

 

LIABILITIES

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

Noninterest-bearing demand

 

$

17,143,341

 

 

$

13,617,167

 

Interest-bearing demand and savings

 

 

39,752,587

 

 

 

27,397,195

 

Time deposits under $250,000

 

 

1,934,617

 

 

 

969,132

 

Time deposits of $250,000 or more

 

 

1,826,245

 

 

 

1,158,535

 

Total deposits

 

 

60,656,790

 

 

 

43,142,029

 

Federal funds purchased and repurchase agreements

 

 

3,324,938

 

 

 

2,609,715

 

Long-term debt

 

 

474,229

 

 

 

385,292

 

Accrued expenses and taxes

 

 

435,351

 

 

 

368,457

 

Other liabilities

 

 

509,214

 

 

 

437,630

 

Total liabilities

 

 

65,400,522

 

 

 

46,943,123

 

SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

Series B Fixed-Rate Reset Non-Cumulative Perpetual Preferred stock, $ 0.01  par value; 30,000  authorized, issued and outstanding

 

 

294,066

 

 

 

—

 

Common stock, $ 1.00  par value; 160,000,000  and 80,000,000  shares authorized; 78,665,809  and 55,056,730  shares issued, 75,960,675  and 48,814,177  shares outstanding, at December 31, 2025 and December 2024, respectively

 

 

78,666

 

 

 

55,057

 

Capital surplus

 

 

4,011,047

 

 

 

1,145,638

 

Retained earnings

 

 

3,736,413

 

 

 

3,174,948

 

Accumulated other comprehensive loss, net

 

 

( 261,520

)

 

 

( 573,050

)

Treasury stock, 2,705,134  and 6,242,553  shares, at cost, respectively

 

 

( 165,104

)

 

 

( 336,052

)

Total shareholders' equity

 

 

7,693,568

 

 

 

3,466,541

 

Total liabilities and shareholders' equity

 

$

73,094,090

 

 

$

50,409,664

 

 
See Notes to Consolidated Financial Statements.

77

 

UMB FINANCIAL CORPORATION
CONSOLIDATED STAT EMENTS OF INCOME
(dollars in thousands, except share and per share data)
 

 

 

Year Ended December 31,

 

 

 

2025

 

 

2024

 

 

2023

 

INTEREST INCOME

 

 

 

 

 

 

 

 

 

Loans

 

$

2,415,279

 

 

$

1,612,948

 

 

$

1,399,961

 

Securities:

 

 

 

 

 

 

 

 

 

Taxable interest

 

 

504,630

 

 

 

257,562

 

 

 

214,981

 

Tax-exempt interest

 

 

130,206

 

 

 

99,375

 

 

 

102,197

 

Total securities income

 

 

634,836

 

 

 

356,937

 

 

 

317,178

 

Federal funds and resell agreements

 

 

38,152

 

 

 

17,628

 

 

 

17,647

 

Interest-bearing due from banks

 

 

264,915

 

 

 

182,145

 

 

 

103,190

 

Trading securities

 

 

1,098

 

 

 

1,351

 

 

 

729

 

Total interest income

 

 

3,354,280

 

 

 

2,171,009

 

 

 

1,838,705

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

Deposits

 

 

1,336,549

 

 

 

982,302

 

 

 

704,210

 

Federal funds and repurchase agreements

 

 

108,704

 

 

 

106,558

 

 

 

93,026

 

Other

 

 

46,822

 

 

 

81,257

 

 

 

121,353

 

Total interest expense

 

 

1,492,075

 

 

 

1,170,117

 

 

 

918,589

 

Net interest income

 

 

1,862,205

 

 

 

1,000,892

 

 

 

920,116

 

Provision for credit losses

 

 

154,500

 

 

 

61,050

 

 

 

41,227

 

Net interest income after provision for credit losses

 

 

1,707,705

 

 

 

939,842

 

 

 

878,889

 

NONINTEREST INCOME

 

 

 

 

 

 

 

 

 

Trust and securities processing

 

 

343,398

 

 

 

290,571

 

 

 

257,200

 

Trading and investment banking

 

 

25,305

 

 

 

24,226

 

 

 

19,630

 

Service charges on deposit accounts

 

 

113,206

 

 

 

84,512

 

 

 

84,950

 

Insurance fees and commissions

 

 

910

 

 

 

1,257

 

 

 

1,009

 

Brokerage fees

 

 

79,592

 

 

 

61,564

 

 

 

54,119

 

Bankcard fees

 

 

113,924

 

 

 

87,797

 

 

 

74,719

 

Investment securities gains (losses), net

 

 

30,967

 

 

 

10,720

 

 

 

( 3,139

)

Other

 

 

82,748

 

 

 

67,470

 

 

 

53,365

 

Total noninterest income

 

 

790,050

 

 

 

628,117

 

 

 

541,853

 

NONINTEREST EXPENSE

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

883,883

 

 

 

593,913

 

 

 

553,421

 

Occupancy, net

 

 

73,722

 

 

 

47,539

 

 

 

48,502

 

Equipment

 

 

64,915

 

 

 

63,406

 

 

 

68,718

 

Supplies and services

 

 

28,503

 

 

 

14,845

 

 

 

16,829

 

Marketing and business development

 

 

45,682

 

 

 

28,439

 

 

 

25,749

 

Processing fees

 

 

172,846

 

 

 

117,899

 

 

 

103,099

 

Legal and consulting

 

 

92,304

 

 

 

46,207

 

 

 

29,998

 

Bankcard

 

 

49,503

 

 

 

44,265

 

 

 

32,969

 

Amortization of other intangible assets

 

 

93,521

 

 

 

7,705

 

 

 

8,587

 

Regulatory fees

 

 

28,751

 

 

 

31,904

 

 

 

77,010

 

Other

 

 

89,170

 

 

 

30,564

 

 

 

34,258

 

Total noninterest expense

 

 

1,622,800

 

 

 

1,026,686

 

 

 

999,140

 

Income before income taxes

 

 

874,955

 

 

 

541,273

 

 

 

421,602

 

Income tax expense

 

 

172,557

 

 

 

100,030

 

 

 

71,578

 

NET INCOME

 

$

702,398

 

 

$

441,243

 

 

$

350,024

 

Less: Preferred dividends

 

 

17,781

 

 

 

—

 

 

 

—

 

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS

 

$

684,617

 

 

$

441,243

 

 

$

350,024

 

 

 

 

 

 

 

 

 

 

 

PER SHARE DATA

 

 

 

 

 

 

 

 

 

Net income per common share – basic

 

$

9.35

 

 

$

9.05

 

 

$

7.22

 

Net income per common share – diluted

 

 

9.29

 

 

 

8.99

 

 

 

7.18

 

Dividends per common share

 

 

1.63

 

 

 

1.57

 

 

 

1.53

 

Weighted average common shares outstanding – basic

 

 

73,259,082

 

 

 

48,747,814

 

 

 

48,503,643

 

Weighted average common shares outstanding – diluted

 

 

73,670,643

 

 

 

49,056,956

 

 

 

48,763,820

 

 
See Notes to Consolidated Financial Statements.

78

 

UMB FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(dollars in thousands)
 

 

 

Year Ended December 31,

 

 

 

2025

 

 

2024

 

 

2023

 

Net income

 

$

702,398

 

 

$

441,243

 

 

$

350,024

 

Other comprehensive income (loss), before tax:

 

 

 

 

 

 

 

 

 

Unrealized gains and losses on debt securities:

 

 

 

 

 

 

 

 

 

Change in unrealized holding gains and losses, net

 

 

343,056

 

 

 

( 8,956

)

 

 

147,977

 

Less: Reclassification adjustment for net (gains) losses included in net income

 

 

( 473

)

 

 

( 139

)

 

 

279

 

Amortization of net unrealized loss on securities transferred from available-for-sale to held-to-maturity

 

 

32,049

 

 

 

35,905

 

 

 

39,851

 

Change in unrealized gains and losses on debt securities

 

 

374,632

 

 

 

26,810

 

 

 

188,107

 

Unrealized gains and losses on derivative hedges:

 

 

 

 

 

 

 

 

 

Change in unrealized gains and losses on derivative hedges, net

 

 

32,973

 

 

 

( 40,530

)

 

 

15,015

 

Less: Reclassification adjustment for net losses (gains) included in net income

 

 

7,287

 

 

 

( 8,069

)

 

 

( 10,654

)

Change in unrealized gains and losses on derivative hedges

 

 

40,260

 

 

 

( 48,599

)

 

 

4,361

 

Other comprehensive income (loss), before tax

 

 

414,892

 

 

 

( 21,789

)

 

 

192,468

 

Income tax (expense) benefit

 

 

( 103,362

)

 

 

5,674

 

 

 

( 46,668

)

Other comprehensive income (loss)

 

 

311,530

 

 

 

( 16,115

)

 

 

145,800

 

Comprehensive income

 

$

1,013,928

 

 

$

425,128

 

 

$

495,824

 

 
See Notes to Consolidated Financial Statements.

79

 

UMB FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CHA NGES IN SHAREHOLDERS' EQUITY
(dollars in thousands, except per share data)
 

 

 

Preferred
Stock

 

Common
Stock

 

 

Capital
Surplus

 

 

Retained
Earnings

 

 

Accumulated Other Comprehensive (Loss) Income

 

 

Treasury
Stock

 

 

Total

 

Balance January 1, 2023

 

$

—

 

$

55,057

 

 

$

1,125,949

 

 

$

2,536,086

 

 

$

( 702,735

)

 

$

( 347,264

)

 

$

2,667,093

 

Total comprehensive income

 

 

—

 

 

—

 

 

 

—

 

 

 

350,024

 

 

 

145,800

 

 

 

—

 

 

 

495,824

 

Common dividends ($ 1.53  per share)

 

 

—

 

 

—

 

 

 

—

 

 

 

( 75,286

)

 

 

—

 

 

 

—

 

 

 

( 75,286

)

Purchase of treasury stock

 

 

—

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

( 8,367

)

 

 

( 8,367

)

Issuances of equity awards, net of forfeitures

 

 

—

 

 

—

 

 

 

( 10,385

)

 

 

—

 

 

 

—

 

 

 

11,104

 

 

 

719

 

Recognition of equity-based compensation

 

 

—

 

 

—

 

 

 

17,975

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

17,975

 

Sale of treasury stock

 

 

—

 

 

—

 

 

 

220

 

 

 

—

 

 

 

—

 

 

 

296

 

 

 

516

 

Exercise of stock options

 

 

—

 

 

—

 

 

 

604

 

 

 

—

 

 

 

—

 

 

 

1,341

 

 

 

1,945

 

Balance December 31, 2023

 

$

—

 

$

55,057

 

 

$

1,134,363

 

 

$

2,810,824

 

 

$

( 556,935

)

 

$

( 342,890

)

 

$

3,100,419

 

Total comprehensive income (loss)

 

 

—

 

 

—

 

 

 

—

 

 

 

441,243

 

 

 

( 16,115

)

 

 

—

 

 

 

425,128

 

Common dividends ($ 1.57  per share)

 

 

—

 

 

—

 

 

 

—

 

 

 

( 77,119

)

 

 

—

 

 

 

—

 

 

 

( 77,119

)

Purchase of treasury stock

 

 

—

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

( 7,738

)

 

 

( 7,738

)

Issuances of equity awards, net of forfeitures

 

 

—

 

 

—

 

 

 

( 11,220

)

 

 

—

 

 

 

—

 

 

 

11,923

 

 

 

703

 

Recognition of equity-based compensation

 

 

—

 

 

—

 

 

 

21,876

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

21,876

 

Sale of treasury stock

 

 

—

 

 

—

 

 

 

342

 

 

 

—

 

 

 

—

 

 

 

240

 

 

 

582

 

Exercise of stock options

 

 

—

 

 

—

 

 

 

1,690

 

 

 

—

 

 

 

—

 

 

 

2,413

 

 

 

4,103

 

Common stock issuance costs

 

 

—

 

 

—

 

 

 

( 1,413

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

( 1,413

)

Balance December 31, 2024

 

$

—

 

$

55,057

 

 

$

1,145,638

 

 

$

3,174,948

 

 

$

( 573,050

)

 

$

( 336,052

)

 

$

3,466,541

 

 

80

 

UMB FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(dollars in thousands, except per share data)
 

 

 

Preferred
Stock

 

Common
Stock

 

 

Capital
Surplus

 

 

Retained
Earnings

 

 

Accumulated Other Comprehensive (Loss) Income

 

 

Treasury
Stock

 

 

Total

 

Balance January 1, 2025

 

$

—

 

$

55,057

 

 

$

1,145,638

 

 

$

3,174,948

 

 

$

( 573,050

)

 

$

( 336,052

)

 

$

3,466,541

 

Total comprehensive income

 

 

—

 

 

—

 

 

 

—

 

 

 

702,398

 

 

 

311,530

 

 

 

—

 

 

 

1,013,928

 

Cash dividends declared:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred dividends Series A ($ 350.00  per share)

 

 

—

 

 

—

 

 

 

—

 

 

 

( 4,025

)

 

 

—

 

 

 

—

 

 

 

( 4,025

)

Preferred dividends Series B ($ 458.54  per share)

 

 

—

 

 

—

 

 

 

—

 

 

 

( 13,756

)

 

 

—

 

 

 

—

 

 

 

( 13,756

)

Common dividends ($ 1.63  per share)

 

 

—

 

 

—

 

 

 

—

 

 

 

( 123,357

)

 

 

—

 

 

 

—

 

 

 

( 123,357

)

Purchase of treasury stock

 

 

—

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

( 17,628

)

 

 

( 17,628

)

Issuances of equity awards, net of forfeitures

 

 

—

 

 

—

 

 

 

( 18,816

)

 

 

—

 

 

 

—

 

 

 

19,616

 

 

 

800

 

Recognition of equity-based compensation

 

 

—

 

 

—

 

 

 

57,334

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

57,334

 

Sale of treasury stock

 

 

—

 

 

—

 

 

 

343

 

 

 

—

 

 

 

—

 

 

 

351

 

 

 

694

 

Exercise of stock options

 

 

—

 

 

—

 

 

 

90

 

 

 

—

 

 

 

—

 

 

 

524

 

 

 

614

 

Common stock issuance

 

 

—

 

 

—

 

 

 

67,056

 

 

 

—

 

 

 

—

 

 

 

168,085

 

 

 

235,141

 

Preferred stock issuance, net of issuance costs

 

 

294,066

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

294,066

 

Preferred stock redemption

 

 

( 110,705

)

 

—

 

 

 

( 4,500

)

 

 

205

 

 

 

—

 

 

 

—

 

 

 

( 115,000

)

Stock issuance for acquisition, net of issuance costs

 

 

110,705

 

 

23,609

 

 

 

2,763,902

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2,898,216

 

Balance December 31, 2025

 

$

294,066

 

$

78,666

 

 

$

4,011,047

 

 

$

3,736,413

 

 

$

( 261,520

)

 

$

( 165,104

)

 

$

7,693,568

 

See Notes to Consolidated Financial Statements.

81

 

UMB FINANCIAL CORPORATION
CONSOLIDATED STATEM ENTS OF CASH FLOWS
(dollars in thousands)
 

 

 

Year Ended December 31,

 

 

 

2025

 

 

2024

 

 

2023

 

OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

 

Net income

 

$

702,398

 

 

$

441,243

 

 

$

350,024

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

Provision for credit losses

 

 

154,500

 

 

 

61,050

 

 

 

41,227

 

Net (accretion) amortization of premiums and discounts from acquisition

 

 

( 139,775

)

 

 

3,573

 

 

 

1,060

 

Depreciation and amortization

 

 

141,770

 

 

 

52,771

 

 

 

58,723

 

Amortization of debt issuance costs

 

 

745

 

 

 

876

 

 

 

876

 

Deferred income tax expense (benefit)

 

 

82,825

 

 

 

( 16,174

)

 

 

( 20,439

)

Net decrease (increase) in trading securities and other earning assets

 

 

6,202

 

 

 

( 10,440

)

 

 

( 113

)

(Gains) losses on investment securities, net

 

 

( 30,967

)

 

 

( 10,720

)

 

 

3,139

 

Losses (gains) on sales of assets

 

 

105

 

 

 

( 3,197

)

 

 

( 4,343

)

Amortization of securities premiums, net of discount accretion

 

 

( 9,739

)

 

 

44,323

 

 

 

42,037

 

Originations of loans held for sale

 

 

( 101,890

)

 

 

( 87,129

)

 

 

( 68,673

)

Gains on sales of loans held for sale, net

 

 

( 2,742

)

 

 

( 2,279

)

 

 

( 1,693

)

Proceeds from sales of loans held for sale

 

 

105,358

 

 

 

91,072

 

 

 

67,924

 

Equity-based compensation

 

 

37,745

 

 

 

22,579

 

 

 

18,694

 

Changes in:

 

 

 

 

 

 

 

 

 

Accrued income

 

 

( 29,265

)

 

 

( 24,592

)

 

 

( 31,075

)

Accrued expenses and taxes

 

 

26,247

 

 

 

( 20,453

)

 

 

148,154

 

Other assets and liabilities, net

 

 

83,176

 

 

 

( 317,217

)

 

 

( 132,918

)

Net cash provided by operating activities

 

 

1,026,693

 

 

 

225,286

 

 

 

472,604

 

INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

 

Securities held to maturity:

 

 

 

 

 

 

 

 

 

Maturities, calls and principal repayments

 

 

627,137

 

 

 

458,174

 

 

 

424,341

 

Purchases

 

 

( 507,706

)

 

 

( 121,021

)

 

 

( 227,077

)

Securities available for sale:

 

 

 

 

 

 

 

 

 

Sales

 

 

646,962

 

 

 

19,154

 

 

 

22,193

 

Maturities, calls and principal repayments

 

 

1,661,802

 

 

 

7,384,085

 

 

 

1,204,346

 

Purchases

 

 

( 4,742,724

)

 

 

( 8,111,653

)

 

 

( 1,162,115

)

Equity securities with readily determinable fair values:

 

 

 

 

 

 

 

 

 

Sales

 

 

22,104

 

 

 

—

 

 

 

—

 

Purchases

 

 

( 602

)

 

 

( 357

)

 

 

( 277

)

Equity securities without readily determinable fair values:

 

 

 

 

 

 

 

 

 

Sales

 

 

52,176

 

 

 

35,304

 

 

 

5,614

 

Maturities, calls and principal repayments

 

 

14,958

 

 

 

71,963

 

 

 

334,898

 

Purchases

 

 

( 131,593

)

 

 

( 50,861

)

 

 

( 404,972

)

Payment of tax equity investment commitments

 

 

( 49,855

)

 

 

( 71,244

)

 

 

( 40,806

)

Net increase in loans

 

 

( 3,252,475

)

 

 

( 2,415,581

)

 

 

( 2,159,132

)

Net (increase) decrease in fed funds sold and resell agreements

 

 

( 1,003,093

)

 

 

( 299,656

)

 

 

713,253

 

Net cash activity from acquisitions and divestitures

 

 

169,262

 

 

 

( 109,046

)

 

 

( 793

)

Net decrease (increase) in interest-bearing balances due from other financial institutions

 

 

955,764

 

 

 

( 31,753

)

 

 

43,359

 

Net purchases of bank premises and equipment

 

 

( 48,584

)

 

 

( 20,009

)

 

 

( 23,104

)

Purchases of bank-owned and company-owned life insurance

 

 

( 35,977

)

 

 

—

 

 

 

( 3,000

)

Proceeds from bank-owned and company-owned life insurance death benefit

 

 

2,346

 

 

 

—

 

 

 

—

 

Net cash used in investing activities

 

 

( 5,620,098

)

 

 

( 3,262,501

)

 

 

( 1,273,272

)

 
 
 
 

82

 

 

FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

 

Net increase in demand and savings deposits

 

 

3,098,494

 

 

 

8,295,094

 

 

 

997,273

 

Net increase (decrease) increase in time deposits

 

 

63,860

 

 

 

( 945,924

)

 

 

2,156,453

 

Net increase (decrease) in fed funds purchased and repurchase agreements

 

 

692,590

 

 

 

490,071

 

 

 

( 102,523

)

Proceeds from short-term debt

 

 

—

 

 

 

500,000

 

 

 

32,856,000

 

Repayment of short-term debt

 

 

—

 

 

 

( 2,300,000

)

 

 

( 31,056,000

)

Repayment of long-term debt

 

 

( 200,000

)

 

 

—

 

 

 

—

 

Cash dividends paid

 

 

( 135,620

)

 

 

( 77,127

)

 

 

( 74,245

)

Payment of common stock issuance costs

 

 

( 524

)

 

 

( 1,413

)

 

 

—

 

Proceeds from exercise of stock options and sales of treasury shares

 

 

1,308

 

 

 

4,685

 

 

 

2,461

 

Purchases of treasury stock

 

 

( 17,628

)

 

 

( 7,738

)

 

 

( 8,367

)

Common stock issuance

 

 

235,141

 

 

 

—

 

 

 

—

 

Preferred stock issuance

 

 

294,066

 

 

 

—

 

 

 

—

 

Preferred stock redemption

 

 

( 115,000

)

 

 

—

 

 

 

—

 

Net cash provided by financing activities

 

 

3,916,687

 

 

 

5,957,648

 

 

 

4,771,052

 

(Decrease) increase in cash and cash equivalents

 

 

( 676,718

)

 

 

2,920,433

 

 

 

3,970,384

 

Cash and cash equivalents at beginning of year

 

 

8,448,691

 

 

 

5,528,258

 

 

 

1,557,874

 

Cash and cash equivalents at end of year

 

$

7,771,973

 

 

$

8,448,691

 

 

$

5,528,258

 

 

 

 

 

 

 

 

 

 

 

Supplemental disclosures:

 

 

 

 

 

 

 

 

 

Income tax payments

 

$

63,242

 

 

$

76,930

 

 

$

79,334

 

Total interest payments

 

 

1,466,097

 

 

 

1,204,688

 

 

 

844,397

 

Noncash disclosures:

 

 

 

 

 

 

 

 

 

Acquisition of tax equity investments

 

$

62,358

 

 

$

62,958

 

 

$

85,555

 

Commitment to fund tax equity investments

 

 

62,358

 

 

 

62,958

 

 

 

85,555

 

Transfer of loans to other real estate owned

 

 

1,531

 

 

 

828

 

 

 

1,738

 

Transfer of loans to other repossessed assets

 

 

39

 

 

 

26,779

 

 

 

—

 

Issuance of common stock as consideration for acquisition

 

 

2,783,510

 

 

 

—

 

 

 

—

 

Issuance of preferred stock as consideration for acquisition

 

 

115,230

 

 

 

—

 

 

 

—

 

Stock based compensation as consideration for acquisition

 

 

20,389

 

 

 

—

 

 

 

—

 

 
See Notes to Consolidated Financial Statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
UMB Financial Corporation is a bank holding company, which offers a wide range of banking and other financial services to its customers through its branches and offices primarily in the Midwestern, Southwestern, and Western regions of the United States. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements. These estimates and assumptions also impact reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Following is a summary of the more significant accounting policies to assist the reader in understanding the financial presentation.

Consolidation
The Company and its wholly owned subsidiaries are included in the Consolidated Financial Statements (references hereinafter to the Company in these Notes to Consolidated Financial Statements include wholly owned subsidiaries). Intercompany accounts and transactions have been eliminated in consolidation.

Business Combinations
The Company accounts for business combinations using the purchase method of accounting in accordance with FASB ASC Topic 805, Business Combinations , which requires assets acquired and liabilities assumed to be recognized at fair value as of the acquisition date.
On January 31, 2025 (Acquisition Date), the Company acquired Heartland Financial USA, Inc. (HTLF) pursuant to an Agreement and Plan of Merger, dated as of April 28, 2024 . See Note 20, “Acquisition” for additional information.

Revenue Recognition
Interest on loans and securities is recognized based on rate multiplied by the principal amount outstanding. This includes the impact of amortization of premiums and discounts. Interest accrual is discontinued when, in the opinion of management, the likelihood of collection becomes doubtful. Noninterest income is recognized when performance obligations are satisfied.

Cash and cash equivalents
Cash and cash equivalents include Cash and due from banks and amounts due from the FRB. Cash on hand, cash items in the process of collection, and amounts due from correspondent banks are included in Cash and due from banks. Amounts due from the FRB are interest-bearing for all periods presented and are included in the Interest-bearing due from banks line on the Company’s Consolidated Balance Sheets.
This table provides a summary of cash and cash equivalents as presented on the Consolidated Statements of Cash Flows as of December 31, 2025 and 2024 (in thousands) :
 

 

 

December 31,

 

 

 

2025

 

 

2024

 

Due from the FRB

 

$

6,819,426

 

 

$

7,875,516

 

Cash and due from banks

 

 

952,547

 

 

 

573,175

 

Cash and cash equivalents at end of year

 

$

7,771,973

 

 

$

8,448,691

 

 
Also included in the Interest-bearing due from banks line, but not considered cash and cash equivalents are interest-bearing accounts held at other financial institutions, which totaled $ 121.1 million and $ 110.8 million at December 31, 2025 and 2024 , respectively.

 
 
 

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Loans and Loans Held for Sale
Loans are classified by the portfolio segments of commercial and industrial, specialty lending, commercial real estate, consumer real estate, consumer, credit cards, and leases and other.
A loan is considered to be collateral dependent when management believes it is probable that it will be unable to collect all principal and interest due according to the contractual terms of the loan. If a loan is collateral dependent, the Company records a valuation allowance equal to the carrying amount of the loan in excess of the present value of the estimated future cash flows discounted at the loan’s effective rate, based on the loan’s observable market price or the fair value of the collateral.
A loan is accounted for as a modification made to a borrower experiencing financial difficulty when a modification has been granted that is deemed concessionary and not temporary to a debtor experiencing financial difficulty. The Company’s modifications generally include interest rate adjustments, principal reductions, and amortization and maturity date extensions. These modifications allow the debtor short-term cash relief to allow them to improve their financial condition. If a loan modification is determined to be made to a borrower experiencing financial difficulty, the loan is considered to be collateral dependent and is evaluated for credit loss as part of the allowance for credit loss analysis.
Loans, including those that are considered to be collateral dependent, are evaluated regularly by management. Loans are considered delinquent when payment has not been received within 30 days of its contractual due date. Loans are placed on nonaccrual status when the collection of interest or principal is 90 days or more past due unless the loan is adequately secured and in the process of collection. When a loan is placed on nonaccrual status, any interest previously accrued but not collected is reversed against current income. Loans may be returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Interest payments received on nonaccrual loans are applied to principal unless the remaining principal balance has been determined to be fully collectible.
The adequacy of the ACL on loans is based on management’s judgment and continuous evaluation of the pertinent factors underlying the credit quality inherent in the loan portfolio. Consideration of quantitative and qualitative factors relevant to each specific segmentation of loans includes lifetime historical loss experience, the impact of the current economic environment, reasonable and supportable forecasts, and detailed analysis of loans determined to be collateral dependent. The actual losses incurred over the lifetime of the portfolio, notwithstanding such considerations, however, could differ from the amounts estimated by management.
The Company maintains an allowance for off-balance sheet credit exposures, to address the credit risk to which the Company is exposed via a contractual obligation to extend credit, unless that obligation is unconditionally cancelable by the Company. The allowance for off-balance sheet credit exposure is included in the Accrued expenses and taxes line item in the Consolidated Balance Sheets. In order to maintain the allowance for off-balance sheet items at an appropriate level, a provision to increase or reduce the allowance is included in the Provision for credit losses line item in the Company’s Consolidated Statements of Income. The allowance for off-balance sheet credit exposure is calculated by applying portfolio segment expected credit loss rates to the expected amount to be funded.
Loans held for sale are carried at the lower of aggregate cost or market value. Loan fees (net of certain direct loan origination costs) on loans held for sale are deferred until the related loans are sold or repaid. Gains or losses on loan sales are recognized at the time of sale and determined using the specific identification method.

Acquired Loans
Acquired loans are initially recorded at fair value. The Company’s accounting methods for acquired loans depends on whether or not the loan reflects more than insignificant credit deterioration since origination at the date of acquisition.
Non-Purchased Credit Deteriorated Loans
Non-purchased credit deteriorated (Non-PCD) loans do not reflect more than insignificant credit deterioration since origination at the date of acquisition. These loans are recorded at fair value and an increase to the allowance for credit losses (ACL) is recorded with a corresponding increase to the provision for credit losses at the date of

85

 

acquisition. The difference between fair value and the unpaid principal balance at the acquisition date is amortized or accreted to interest income over the contractual life of the loan using the effective interest method.
Purchased Credit Deteriorated Loans
Purchased loans that reflect a more than insignificant credit deterioration since origination at the date of acquisition are classified as purchased credit deteriorated (PCD) loans. PCD loans are recorded at fair value plus the ACL expected at the time of acquisition. Under this method, there is no provision for credit losses on acquisition of PCD loans. The non-credit-related difference between fair value and the unpaid principal balance at the acquisition date is amortized or accreted to interest income over the contractual life of the loan using the effective interest method.

Securities
Debt securities available for sale principally include U.S. Treasury and Agency securities, GSE mortgage-backed securities, certain securities of state and political subdivisions, corporates, and collateralized loan obligations. Debt securities classified as available for sale are measured at fair value. Unrealized holding gains and losses are excluded from earnings and reported in AOCI until realized.
Securities held to maturity are carried at amortized historical cost, net of the allowance for credit losses, based on management’s intention, and the Company’s ability to hold them to maturity. The Company classifies certain U.S. Treasury and Agency securities, GSE mortgage-backed securities, and securities of state and political subdivisions as held to maturity.
Trading securities, acquired for subsequent sale to customers, are carried at fair value. Market adjustments, fees and gains or losses on the sale of trading securities are considered to be a normal part of operations and are included in trading and investment banking income.
The gain or loss realized on the sale of securities classified as available for sale, as determined using the specific identification method for determining the cost of the securities sold, is computed with reference to its amortized cost and is included in current earnings.
Securities may be transferred from the available-for-sale classification to the held-to-maturity classification when the Company has the positive intent and ability to hold these securities to maturity. Transfers of securities are made at fair value at the time of transfer. The unrealized holding gain or loss at the time of transfer is retained in AOCI and amortized over the remaining life of the securities, offsetting the related amortization of discount or premium on the transferred securities. No gains or losses are recognized at the time of the transfer.

Equity-method investments

The Company accounts for certain other investments using equity-method accounting. For equity securities without readily determinable fair values, the Company’s proportionate share of the income or loss is recognized on a one-quarter lag. When transparency in pricing exists, other investments are considered equity securities with readily determinable fair values.
Goodwill and Other Intangibles
Goodwill is tested for impairment annually and more frequently whenever events or changes in circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying value. To test goodwill for impairment, the Company performs a qualitative assessment of each reporting unit. If the Company determines, on the basis of qualitative factors, that the fair value of the reporting unit is more likely than not greater than the carrying amount, the quantitative impairment test is not required. Otherwise, the Company compares the fair value of its reporting units to their carrying amounts to determine if an impairment exists and the amount of impairment loss. An impairment loss is measured as the excess of the carrying value of a reporting unit’s goodwill over its fair value.
No goodwill impairments were recognized in 2025, 2024, or 2023 . Other intangible assets, which relate to core deposits, non-compete agreements, and customer relationships, are amortized over their useful life. Intangible assets are evaluated for impairment when events or circumstances dictate. No intangible asset impairments were recognized in 2025, 2024, or 2023 . The Company does no t have any indefinite lived intangible assets.

86

 

Premises and Equipment
Premises and equipment are stated at cost less accumulated depreciation, which is computed primarily on the straight-line method. Premises are depreciated over 7 to 40 year lives, while equipment is depreciated over lives of 3 to 25 years . Gains and losses from the sale of Premises and equipment are included in Other noninterest income and Other noninterest expense, respectively.

Impairment of Long-Lived Assets
Long-lived assets, including Premises and equipment, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset or group of assets may not be recoverable. The impairment review includes a comparison of future cash flows expected to be generated by the asset or group of assets to their current carrying value. If the carrying value of the asset or group of assets exceeds expected cash flows (undiscounted and without interest charges), an impairment loss is recognized to the extent the carrying value exceeds fair value. No impairments were recognized in 2025, 2024, or 2023 .

Income Taxes
The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are measured based on the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the periods in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The provision for deferred income taxes represents the change in the deferred income tax accounts during the year excluding the tax effect of the change in net unrealized gain (loss) on securities available for sale and certain derivative items.
The Company records deferred tax assets to the extent these assets will more likely than not be realized. All available evidence is considered in making such determination, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. A valuation allowance is recorded for the portion of deferred tax assets that are not more-likely-than-not to be realized, and any changes to the valuation allowance are recorded in income tax expense.
The Company records the financial statement effects of an income tax position when it is more likely than not, based on the technical merits, that it will be sustained upon examination. A tax position that meets the more-likely-than-not recognition threshold is measured and recorded as the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with a taxing authority. Previously recognized tax positions are derecognized in the first period in which it is no longer more likely than not that the tax position will be sustained. The benefit associated with previously unrecognized tax positions are generally recognized in the first period in which the more-likely-than-not threshold is met at the reporting date, the tax matter is ultimately settled through negotiation or litigation, or when the related statute of limitations for the relevant taxing authority to examine and challenge the tax position has expired. When the Company determines that an unrecognized tax benefit liability is no longer necessary, the liability is reversed, and a tax benefit is recognized in the period in which it is determined that the unrecognized tax benefit liability is no longer necessary. The recognition, derecognition and measurement of tax positions are based on management’s best judgment given the facts, circumstance and information available at the reporting date.
The Company recognizes accrued interest related to unrecognized tax benefits in interest expense and penalties in other noninterest expense. Accrued interest and penalties are included within the related liability lines in the Consolidated Balance Sheets. For the year ended December 31, 2025 , the Company has recognized an immaterial amount in interest and penalties related to the unrecognized tax benefits.

Derivatives
The Company records all derivatives on the Consolidated Balance Sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting, and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Currently, 15 of the Company’s derivatives are designated in qualifying hedging relationships. The remainder of the Company’s derivatives are not

87

 

designated in qualifying hedging relationships, as the derivatives are not used to manage risks within the Company’s assets or liabilities. All changes in fair value of the Company’s non-designated derivatives and fair value hedges are recognized directly in earnings. Changes in fair value of the Company’s cash flow hedges are recognized in AOCI and are reclassified to earnings when the hedged transaction affects earnings.
Per Share Data
Basic net income per common share is computed using net income available to common shareholders and the weighted average number of shares of common stock outstanding during each period. Diluted net income per common share is determined using net income available to common shareholders and the weighted average common shares and assumed incremental common shares issued.
The following table provides the amounts used in the determination of basic and diluted net income per common share at December 31, 2025, 2024, and 2023 (in thousands, except share and per share data) :
 

 

 

December 31,

 

 

 

2025

 

 

2024

 

 

2023

 

Net income

 

$

702,398

 

 

$

441,243

 

 

$

350,024

 

Less: Preferred dividends

 

 

17,781

 

 

 

—

 

 

 

—

 

Net income available to common shareholders

 

$

684,617

 

 

$

441,243

 

 

$

350,024

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding for basic earnings per share

 

 

73,259,082

 

 

 

48,747,814

 

 

 

48,503,643

 

Assumed incremental common shares issued upon vesting of outstanding restricted stock units

 

 

411,561

 

 

 

309,142

 

 

 

260,177

 

Weighted average common shares for diluted earnings per share

 

 

73,670,643

 

 

 

49,056,956

 

 

 

48,763,820

 

Net income per common share – basic

 

$

9.35

 

 

$

9.05

 

 

$

7.22

 

Net income per common share – diluted

 

 

9.29

 

 

 

8.99

 

 

 

7.18

 

Number of antidilutive restricted stock units excluded from diluted earnings per share computation

 

 

—

 

 

 

—

 

 

 

—

 

Number of antidilutive stock options excluded from diluted earnings per share computation

 

 

4,962

 

 

 

—

 

 

 

55,649

 

Accounting for Stock-Based Compensation

The Company measures the cost of employee services received in exchange for an award of equity instruments based on the fair value of the award on the date of the grant. For stock options, restricted stock, and service-based restricted stock unit awards, the grant date fair value is estimated using either an option-pricing model which is consistent with the terms of the award or an observed market price, if such a price exists. For performance-based restricted stock unit awards, the grant date fair value is based on the quoted price of the Company’s common stock on the grant date less the present value of expected dividends not received during the vesting period. Such cost is generally recognized over the vesting period during which an employee is required to provide service in exchange for the award and, in some cases, when performance metrics are met. The Company accounts for forfeitures of stock-based compensation on an actual basis as they occur.
2. NEW ACCOUNTING PRONOUNCEMENTS
Segment Reporting In November 2023, the FASB issued Accounting Standards Update (ASU) No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” The ASU requires expanded segment disclosures, including disclosure of significant segment expenses and other segment items on an annual and interim basis. The Company adopted the amended guidance for the annual financial statements in 2024 and the interim disclosure requirements will be effective for interim periods beginning January 1, 2025. The adoption of this amendment did not have any impact on the Consolidated Financial Statements aside from additional disclosures. See Note 12, “Business Segment Reporting” for related disclosures.
Income Taxes In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” The ASU is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in this update require additional disclosures primarily related to the rate

88

 

reconciliation and income taxes paid information. The amendments in this update are effective for fiscal years beginning after December 15, 2024. The amendments in this update were adopted on January 1, 2025. The adoption of this accounting pronouncement had no impact on the Consolidated Financial Statements aside from additional disclosures. See Note 16, “Income Taxes” for related disclosures.

3. LOANS AND ALLOWANCE FOR CREDIT LOSSES
Loan Origination/Risk Management
The Company has certain lending policies and procedures in place that are designed to minimize the level of risk within the loan portfolio. Diversification of the loan portfolio manages the risk associated with fluctuations in economic conditions. Authority levels are established for the extension of credit to ensure consistency throughout the Company. It is necessary that policies, processes, and practices implemented to control the risks of individual credit transactions and portfolio segments are sound and adhered to. The Company maintains an independent loan review department that reviews and validates the risk assessment on a continual basis. Management regularly evaluates the results of the loan reviews. The loan review process complements and reinforces the risk identification and assessment decisions made by lenders and credit personnel, as well as the Company’s policies and procedures.
Commercial and industrial loans are underwritten after evaluating and understanding the borrower’s ability to operate profitably and prudently expand its business. Commercial loans are made based on the identified cash flows of the borrower and on the underlying collateral provided by the borrower. The cash flows of the borrower, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts from its customers. Beginning with the third quarter 2025, commercial and industrial loans include all loans to Non-Depository Financial Institutions (NDFIs), which includes a wide range of financial entities that provide services similar to those of traditional banks but do not accept deposits from the general public and are not regulated by the same federal banking agencies. Previously reported balances have been reclassified for purposes of comparability.
Specialty lending loans include Asset-based loans, which are offered primarily in the form of revolving lines of credit to commercial borrowers that do not generally qualify for traditional bank financing. Asset-based loans are underwritten based primarily upon the value of the collateral pledged to secure the loan, rather than on the borrower’s general financial condition. The Company utilizes pre-loan due diligence techniques, monitoring disciplines, and loan management practices common within the asset-based lending industry to underwrite loans to these borrowers.
Commercial real estate loans are subject to underwriting standards and processes similar to commercial loans, in addition to those of real estate loans. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts, and the repayment of these loans is largely dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. The Company requires that an appraisal of the collateral be made at origination and on an as-needed basis, in conformity with current market conditions and regulatory requirements. The underwriting standards address both owner and non-owner-occupied real estate. Also included in Commercial real estate are Construction loans that are underwritten using feasibility studies, independent appraisal reviews, sensitivity analysis or absorption and lease rates, and financial analysis of the developers and property owners. Construction loans are based upon estimates of costs and value associated with the complete project. Construction loans often involve the disbursement of substantial funds with repayment substantially dependent on the success of the ultimate project. Sources of repayment for these types of loans may be pre-committed permanent loans, sales of developed property or an interim loan commitment from the Company until permanent financing is obtained. These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their repayment being sensitive to interest rate changes, governmental regulation of real property, economic conditions, completion of the construction project, and the availability of long-term financing.
Consumer real estate loans, including residential real estate and home equity loans, are underwritten based on the borrower’s loan-to-value percentage, collection remedies, and overall credit history.

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Consumer loans are underwritten based on the borrower’s repayment ability. The Company monitors delinquencies on all of its consumer loans and leases. The underwriting and review practices combined with the relatively small loan amounts that are spread across many individual borrowers, minimizes risk. Consumer loans and leases that are 90 days past due or more are considered non-performing.
Credit cards include both commercial and consumer credit cards. Commercial credit cards are generally unsecured and are underwritten with criteria similar to commercial loans, including an analysis of the borrower’s cash flow, available business capital, and overall creditworthiness of the borrower. Consumer credit cards are underwritten based on the borrower’s repayment ability. The Company monitors delinquencies on all of its consumer credit cards and periodically reviews the distribution of credit scores relative to historical periods to monitor credit risk on its consumer credit card loans. During the first quarter of 2024, the Company purchased a co-branded credit card portfolio. The purchase included $ 109.4 million in credit card receivables.
Credit risk is a potential loss resulting from nonpayment of either the primary or secondary exposure. Credit risk is mitigated with formal risk management practices and a thorough initial credit-granting process including consistent underwriting standards and approval process. Control factors or techniques to minimize credit risk include knowing the client, understanding total exposure, analyzing the client and debtor’s financial capacity, and monitoring the client’s activities. Credit risk and portions of the portfolio risk are managed through concentration considerations, average risk ratings, and other aggregate characteristics.
The loan portfolio is comprised of loans originated by the Company and purchased loans in connection with the Company’s acquisition of HTLF on January 31, 2025. The purchased loans were recorded at estimated fair value at the Acquisition Date with no carryover of the related allowance. As of the Acquisition Date, loans from the HTLF acquisition had a fair value of $ 9.7 billion, net of allowance for credit losses on PCD loans. See Note 20, “Acquisition” for additional information.
Loan Aging Analysis
The following tables provide a summary of loan classes and an aging of past due loans at December 31, 2025 and 2024 (in thousands):
 

 

 

December 31, 2025

 

 

 

30-89
Days Past
Due and
Accruing

 

 

Greater
than 90
Days Past
Due and
Accruing

 

 

Nonaccrual
Loans

 

 

Total
Past Due

 

 

Current

 

 

Total
Loans

 

Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

$

36,391

 

 

$

6,417

 

 

$

26,633

 

 

$

69,441

 

 

$

16,201,079

 

 

$

16,270,520

 

Specialty lending

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

518,237

 

 

 

518,237

 

Commercial real estate

 

 

24,786

 

 

 

—

 

 

 

86,838

 

 

 

111,624

 

 

 

16,264,615

 

 

 

16,376,239

 

Consumer real estate

 

 

10,451

 

 

 

244

 

 

 

29,910

 

 

 

40,605

 

 

 

4,395,863

 

 

 

4,436,468

 

Consumer

 

 

689

 

 

 

5,237

 

 

 

777

 

 

 

6,703

 

 

 

232,108

 

 

 

238,811

 

Credit cards

 

 

9,194

 

 

 

6,505

 

 

 

508

 

 

 

16,207

 

 

 

684,526

 

 

 

700,733

 

Leases and other

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

238,400

 

 

 

238,400

 

Total loans

 

$

81,511

 

 

$

18,403

 

 

$

144,666

 

 

$

244,580

 

 

$

38,534,828

 

 

$

38,779,408

 

 

90

 

 
 

 

 

December 31, 2024

 

 

 

30-89
Days Past
Due and
Accruing

 

 

Greater
than 90
Days Past
Due and
Accruing

 

 

Nonaccrual
Loans

 

 

Total
Past Due

 

 

Current

 

 

Total
Loans

 

Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

$

446

 

 

$

1

 

 

$

4,423

 

 

$

4,870

 

 

$

10,988,901

 

 

$

10,993,771

 

Specialty lending

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

469,194

 

 

 

469,194

 

Commercial real estate

 

 

1,013

 

 

 

—

 

 

 

805

 

 

 

1,818

 

 

 

10,129,467

 

 

 

10,131,285

 

Consumer real estate

 

 

553

 

 

 

—

 

 

 

13,614

 

 

 

14,167

 

 

 

3,172,963

 

 

 

3,187,130

 

Consumer

 

 

175

 

 

 

12

 

 

 

40

 

 

 

227

 

 

 

193,633

 

 

 

193,860

 

Credit cards

 

 

9,316

 

 

 

7,589

 

 

 

400

 

 

 

17,305

 

 

 

561,461

 

 

 

578,766

 

Leases and other

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

88,295

 

 

 

88,295

 

Total loans

 

$

11,503

 

 

$

7,602

 

 

$

19,282

 

 

$

38,387

 

 

$

25,603,914

 

 

$

25,642,301

 

 
The Company sold consumer real estate loans with proceeds of $ 105.4 million, $ 91.1 million, and $ 67.9 million in the secondary market without recourse during the periods ended December 31, 2025, 2024, and 2023, respectively.
The Company has ceased the recognition of interest on loans with a carrying value of $ 144.7 million and $ 19.3 million at December 31, 2025 and 2024 , respectively. Restructured loans totaled $ 169 thousand and $ 196 thousand at December 31, 2025 and 2024, respectively. Loans 90 days past due and still accruing interest amounted to $ 18.4 million and $ 7.6 million at December 31, 2025 and 2024, respectively. All interest accrued but not received for loans placed on nonaccrual is reversed against interest income. There was an insignificant amount of interest reversed related to loans on nonaccrual during 2025 and 2024. Nonaccrual loans with no related allowance for credit losses total ed $ 76.8 million and $ 19.3 million at December 31, 2025 and 2024, respectively.
The following tables provide the amortized cost of nonaccrual loans with no related allowance for credit losses by loan class at December 31, 2025 and 2024 (in thousands):
 

 

 

December 31, 2025

 

 

 

Nonaccrual
Loans

 

 

Amortized Cost of Nonaccrual Loans with no related Allowance

 

Loans

 

 

 

 

 

 

Commercial and industrial

 

$

26,633

 

 

$

10,870

 

Specialty lending

 

 

—

 

 

 

—

 

Commercial real estate

 

 

86,838

 

 

 

35,973

 

Consumer real estate

 

 

29,910

 

 

 

28,661

 

Consumer

 

 

777

 

 

 

777

 

Credit cards

 

 

508

 

 

 

508

 

Leases and other

 

 

—

 

 

 

—

 

Total loans

 

$

144,666

 

 

$

76,789

 

 
 

91

 

 

 

December 31, 2024

 

 

 

Nonaccrual
Loans

 

 

Amortized Cost of Nonaccrual Loans with no related Allowance

 

Loans

 

 

 

 

 

 

Commercial and industrial

 

$

4,423

 

 

$

4,423

 

Specialty lending

 

 

—

 

 

 

—

 

Commercial real estate

 

 

805

 

 

 

805

 

Consumer real estate

 

 

13,614

 

 

 

13,614

 

Consumer

 

 

40

 

 

 

40

 

Credit cards

 

 

400

 

 

 

400

 

Leases and other

 

 

—

 

 

 

—

 

Total loans

 

$

19,282

 

 

$

19,282

 

 

92

 

Amortized Cost
The following tables provide a summary of the amortized cost balance of each of the Company’s loan classes disaggregated by collateral type and origination year as of December 31, 2025 and 2024 as well as the gross charge-offs by loan class and origination year for the year ended December 31, 2024 (in thousands):
 

 

 

December 31, 2025

 

 

 

Amortized Cost Basis by Origination Year - Term Loans

 

 

 

 

 

 

 

 

 

 

Loan Segment
and Type

 

2025

 

 

2024

 

 

2023

 

 

2022

 

 

2021

 

 

Prior

 

 

Amortized Cost - Revolving Loans

 

 

Amortized Cost - Revolving Loans Converted to Term Loans

 

 

Total

 

Commercial and industrial:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equipment/Accounts Receivable/Inventory

 

$

2,989,029

 

 

$

1,901,767

 

 

$

1,039,595

 

 

$

929,230

 

 

$

471,193

 

 

$

321,761

 

 

$

5,636,442

 

 

$

12,186

 

 

$

13,301,203

 

Agriculture

 

 

30,385

 

 

 

22,585

 

 

 

24,980

 

 

 

7,827

 

 

 

3,859

 

 

 

3,180

 

 

 

426,729

 

 

 

2,258

 

 

 

521,803

 

NDFIs

 

 

130,392

 

 

 

286,076

 

 

 

368,137

 

 

 

86,436

 

 

 

12,136

 

 

 

29,406

 

 

 

1,517,283

 

 

 

271

 

 

 

2,430,137

 

Overdrafts

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

17,377

 

 

 

—

 

 

 

17,377

 

Total Commercial and industrial

 

 

3,149,806

 

 

 

2,210,428

 

 

 

1,432,712

 

 

 

1,023,493

 

 

 

487,188

 

 

 

354,347

 

 

 

7,597,831

 

 

 

14,715

 

 

 

16,270,520

 

Current period charge-offs

 

 

1,835

 

 

 

8,794

 

 

 

7,124

 

 

 

10,241

 

 

 

1,170

 

 

 

350

 

 

 

15,131

 

 

 

—

 

 

 

44,645

 

Specialty lending:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-based lending

 

 

46,480

 

 

 

5,639

 

 

 

—

 

 

 

5,801

 

 

 

25,763

 

 

 

22,632

 

 

 

411,922

 

 

 

—

 

 

 

518,237

 

Total Specialty lending

 

 

46,480

 

 

 

5,639

 

 

 

—

 

 

 

5,801

 

 

 

25,763

 

 

 

22,632

 

 

 

411,922

 

 

 

—

 

 

 

518,237

 

Current period charge-offs

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Commercial real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Owner-occupied

 

 

1,151,075

 

 

 

529,761

 

 

 

599,178

 

 

 

955,385

 

 

 

775,378

 

 

 

724,775

 

 

 

39,505

 

 

 

—

 

 

 

4,775,057

 

Non-owner-occupied

 

 

1,664,285

 

 

 

656,031

 

 

 

847,458

 

 

 

1,018,831

 

 

 

769,616

 

 

 

736,502

 

 

 

41,093

 

 

 

1,054

 

 

 

5,734,870

 

Farmland

 

 

258,796

 

 

 

74,542

 

 

 

85,814

 

 

 

131,009

 

 

 

83,613

 

 

 

163,318

 

 

 

66,403

 

 

 

75

 

 

 

863,570

 

5+ Multi-family

 

 

329,902

 

 

 

179,107

 

 

 

171,945

 

 

 

554,125

 

 

 

434,660

 

 

 

96,475

 

 

 

10,441

 

 

 

—

 

 

 

1,776,655

 

1-4 Family construction

 

 

75,849

 

 

 

11,564

 

 

 

240

 

 

 

520

 

 

 

—

 

 

 

—

 

 

 

1,301

 

 

 

—

 

 

 

89,474

 

General construction

 

 

1,099,253

 

 

 

868,115

 

 

 

719,128

 

 

 

373,196

 

 

 

28,313

 

 

 

16,273

 

 

 

32,335

 

 

 

—

 

 

 

3,136,613

 

Total Commercial real estate

 

 

4,579,160

 

 

 

2,319,120

 

 

 

2,423,763

 

 

 

3,033,066

 

 

 

2,091,580

 

 

 

1,737,343

 

 

 

191,078

 

 

 

1,129

 

 

 

16,376,239

 

Current period charge-offs

 

 

—

 

 

 

—

 

 

 

3,968

 

 

 

1,978

 

 

 

1,072

 

 

 

4,774

 

 

 

—

 

 

 

—

 

 

 

11,792

 

Consumer real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HELOC

 

 

2,748

 

 

 

399

 

 

 

756

 

 

 

2,075

 

 

 

577

 

 

 

7,784

 

 

 

698,503

 

 

 

5,331

 

 

 

718,173

 

First lien: 1-4 family

 

 

653,333

 

 

 

368,156

 

 

 

364,405

 

 

 

631,555

 

 

 

735,751

 

 

 

830,570

 

 

 

6,864

 

 

 

13

 

 

 

3,590,647

 

Junior lien: 1-4 family

 

 

20,458

 

 

 

31,221

 

 

 

19,212

 

 

 

28,538

 

 

 

17,405

 

 

 

6,048

 

 

 

4,766

 

 

 

—

 

 

 

127,648

 

Total Consumer real estate

 

 

676,539

 

 

 

399,776

 

 

 

384,373

 

 

 

662,168

 

 

 

753,733

 

 

 

844,402

 

 

 

710,133

 

 

 

5,344

 

 

 

4,436,468

 

Current period charge-offs

 

 

—

 

 

 

—

 

 

 

123

 

 

 

162

 

 

 

765

 

 

 

525

 

 

 

466

 

 

 

—

 

 

 

2,041

 

Consumer:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revolving line

 

 

1,485

 

 

 

34

 

 

 

23

 

 

 

49

 

 

 

24

 

 

 

526

 

 

 

160,454

 

 

 

102

 

 

 

162,697

 

Auto

 

 

8,179

 

 

 

7,292

 

 

 

9,743

 

 

 

5,307

 

 

 

1,118

 

 

 

248

 

 

 

—

 

 

 

—

 

 

 

31,887

 

Other

 

 

12,907

 

 

 

11,197

 

 

 

3,514

 

 

 

5,917

 

 

 

853

 

 

 

1,272

 

 

 

8,567

 

 

 

—

 

 

 

44,227

 

Total Consumer

 

 

22,571

 

 

 

18,523

 

 

 

13,280

 

 

 

11,273

 

 

 

1,995

 

 

 

2,046

 

 

 

169,021

 

 

 

102

 

 

 

238,811

 

Current period charge-offs

 

 

7

 

 

 

113

 

 

 

256

 

 

 

183

 

 

 

12

 

 

 

90

 

 

 

2,877

 

 

 

—

 

 

 

3,538

 

Credit cards:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

347,749

 

 

 

—

 

 

 

347,749

 

Commercial

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

352,984

 

 

 

—

 

 

 

352,984

 

Total Credit cards

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

700,733

 

 

 

—

 

 

 

700,733

 

Current period charge-offs

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

25,676

 

 

 

—

 

 

 

25,676

 

Leases and other:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leases

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,214

 

 

 

—

 

 

 

—

 

 

 

1,214

 

Other

 

 

181,160

 

 

 

16,408

 

 

 

8,588

 

 

 

8,713

 

 

 

7,344

 

 

 

1,671

 

 

 

13,302

 

 

 

—

 

 

 

237,186

 

Total Leases and other

 

 

181,160

 

 

 

16,408

 

 

 

8,588

 

 

 

8,713

 

 

 

7,344

 

 

 

2,885

 

 

 

13,302

 

 

 

—

 

 

 

238,400

 

Current period charge-offs

 

 

—

 

 

 

7

 

 

 

20

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

27

 

Total loans

 

$

8,655,716

 

 

$

4,969,894

 

 

$

4,262,716

 

 

$

4,744,514

 

 

$

3,367,603

 

 

$

2,963,655

 

 

$

9,794,020

 

 

$

21,290

 

 

$

38,779,408

 

 

93

 

 

 

December 31, 2024

 

 

 

Amortized Cost Basis by Origination Year - Term Loans

 

 

 

 

 

 

 

 

 

 

Loan Segment
and Type

 

2024

 

 

2023

 

 

2022

 

 

2021

 

 

2020

 

 

Prior

 

 

Amortized Cost - Revolving Loans

 

 

Amortized Cost - Revolving Loans Converted to Term Loans

 

 

Total

 

Commercial and industrial:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equipment/Accounts Receivable/Inventory

 

$

2,054,295

 

 

$

1,045,835

 

 

$

916,112

 

 

$

682,754

 

 

$

293,173

 

 

$

135,072

 

 

$

3,975,094

 

 

$

20,356

 

 

$

9,122,691

 

Agriculture

 

 

9,857

 

 

 

5,750

 

 

 

3,554

 

 

 

2,208

 

 

 

356

 

 

 

97

 

 

 

156,546

 

 

 

—

 

 

 

178,368

 

NDFIs

 

 

266,024

 

 

 

350,733

 

 

 

94,730

 

 

 

8,997

 

 

 

10,467

 

 

 

9,080

 

 

 

941,454

 

 

 

—

 

 

 

1,681,485

 

Overdrafts

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

11,227

 

 

 

—

 

 

 

11,227

 

Total Commercial and industrial

 

 

2,330,176

 

 

 

1,402,318

 

 

 

1,014,396

 

 

 

693,959

 

 

 

303,996

 

 

 

144,249

 

 

 

5,084,321

 

 

 

20,356

 

 

 

10,993,771

 

Specialty lending:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset-based lending

 

 

5,803

 

 

 

—

 

 

 

8,026

 

 

 

30,702

 

 

 

29,392

 

 

 

—

 

 

 

395,271

 

 

 

—

 

 

 

469,194

 

Total Specialty lending

 

 

5,803

 

 

 

—

 

 

 

8,026

 

 

 

30,702

 

 

 

29,392

 

 

 

—

 

 

 

395,271

 

 

 

—

 

 

 

469,194

 

Commercial real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Owner-occupied

 

 

352,517

 

 

 

277,049

 

 

 

593,480

 

 

 

442,805

 

 

 

293,799

 

 

 

275,207

 

 

 

4,948

 

 

 

25,266

 

 

 

2,265,071

 

Non-owner-occupied

 

 

784,434

 

 

 

527,773

 

 

 

1,006,769

 

 

 

727,365

 

 

 

404,362

 

 

 

324,839

 

 

 

32,312

 

 

 

—

 

 

 

3,807,854

 

Farmland

 

 

54,656

 

 

 

47,357

 

 

 

58,154

 

 

 

36,127

 

 

 

183,762

 

 

 

23,016

 

 

 

107,468

 

 

 

3

 

 

 

510,543

 

5+ Multi-family

 

 

161,767

 

 

 

47,136

 

 

 

302,225

 

 

 

256,032

 

 

 

28,819

 

 

 

18,732

 

 

 

9,202

 

 

 

—

 

 

 

823,913

 

1-4 Family construction

 

 

46,096

 

 

 

1,385

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

5

 

 

 

—

 

 

 

47,486

 

General construction

 

 

493,723

 

 

 

644,885

 

 

 

1,222,539

 

 

 

235,758

 

 

 

4,049

 

 

 

514

 

 

 

74,950

 

 

 

—

 

 

 

2,676,418

 

Total Commercial real estate

 

 

1,893,193

 

 

 

1,545,585

 

 

 

3,183,167

 

 

 

1,698,087

 

 

 

914,791

 

 

 

642,308

 

 

 

228,885

 

 

 

25,269

 

 

 

10,131,285

 

Consumer real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HELOC

 

 

90

 

 

 

16

 

 

 

450

 

 

 

455

 

 

 

334

 

 

 

5,049

 

 

 

390,843

 

 

 

2,484

 

 

 

399,721

 

First lien: 1-4 family

 

 

413,395

 

 

 

361,242

 

 

 

565,017

 

 

 

635,217

 

 

 

496,758

 

 

 

273,628

 

 

 

—

 

 

 

—

 

 

 

2,745,257

 

Junior lien: 1-4 family

 

 

12,516

 

 

 

9,969

 

 

 

10,004

 

 

 

3,978

 

 

 

2,934

 

 

 

2,676

 

 

 

75

 

 

 

—

 

 

 

42,152

 

Total Consumer real estate

 

 

426,001

 

 

 

371,227

 

 

 

575,471

 

 

 

639,650

 

 

 

500,026

 

 

 

281,353

 

 

 

390,918

 

 

 

2,484

 

 

 

3,187,130

 

Consumer:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revolving line

 

 

35

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

101,407

 

 

 

—

 

 

 

101,442

 

Auto

 

 

8,567

 

 

 

7,429

 

 

 

3,534

 

 

 

1,928

 

 

 

673

 

 

 

283

 

 

 

—

 

 

 

—

 

 

 

22,414

 

Other

 

 

13,050

 

 

 

2,876

 

 

 

10,065

 

 

 

25,659

 

 

 

342

 

 

 

796

 

 

 

17,216

 

 

 

—

 

 

 

70,004

 

Total Consumer

 

 

21,652

 

 

 

10,305

 

 

 

13,599

 

 

 

27,587

 

 

 

1,015

 

 

 

1,079

 

 

 

118,623

 

 

 

—

 

 

 

193,860

 

Credit cards:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

328,474

 

 

 

—

 

 

 

328,474

 

Commercial

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

250,292

 

 

 

—

 

 

 

250,292

 

Total Credit cards

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

578,766

 

 

 

—

 

 

 

578,766

 

Leases and other:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leases

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,492

 

 

 

—

 

 

 

—

 

 

 

1,492

 

Other

 

 

30,622

 

 

 

17,322

 

 

 

13,284

 

 

 

9,895

 

 

 

2,335

 

 

 

2,035

 

 

 

11,310

 

 

 

—

 

 

 

86,803

 

Total Leases and other

 

 

30,622

 

 

 

17,322

 

 

 

13,284

 

 

 

9,895

 

 

 

2,335

 

 

 

3,527

 

 

 

11,310

 

 

 

—

 

 

 

88,295

 

Total loans

 

$

4,707,447

 

 

$

3,346,757

 

 

$

4,807,943

 

 

$

3,099,880

 

 

$

1,751,555

 

 

$

1,072,516

 

 

$

6,808,094

 

 

$

48,109

 

 

$

25,642,301

 

Accrued interest on loans totaled $ 176.1 mi llion and $ 125.7 million as of December 31, 2025 and 2024, respectively, and is included in the Accrued income line on the Company’s Consolidated Balance Sheets. The total amount of accrued interest is excluded from the amortized cost basis of loans presented above. Further, the Company has elected not to measure an allowance for credit losses for accrued interest receivable.

Credit Quality Indicators
As part of the on-going monitoring of the credit quality of the Company’s loan portfolio, management tracks certain credit quality indicators including trends related to the risk grading of specified classes of loans, net charge-offs, non-performing loans, and general economic conditions.
The Company utilizes a risk grading matrix to assign a rating to each of its commercial, commercial real estate, and construction real estate loans. Changes in credit risk are monitored on a continuous basis and changes in risk ratings are made when identified. The loan ratings are summarized into the following categories: Pass, Special Mention, Substandard, and Doubtful. Any loan not classified in one of the categories described below is considered to be a Pass loan. A description of the general characteristics of the loan rating categories is as follows:
• Special Mention – This rating reflects a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or the borrower’s credit position at some future date. The rating

94

 

is not adversely classified and does not expose an institution to sufficient risk to warrant adverse classification.

• Substandard – This rating represents an asset inadequately protected by the current sound worth and paying capacity of the borrower or of the collateral pledged, if any. Assets so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. Loans in this category are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard assets, does not have to exist in individual assets classified as substandard.

• Doubtful – This rating represents an asset that has all the weaknesses inherent in an asset classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, based on currently existing facts, conditions and values, highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonably specific pending factors, which may work to the advantage of strengthening the asset, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors include proposed merger, acquisition, liquidation procedures, capital injection, or perfecting liens.

Commercial and industrial
A discussion of the credit quality indicators that impact each type of collateral securing Commercial and industrial loans is included below:
Equipment, accounts receivable, and inventory General commercial and industrial loans are secured by working capital assets and non-real estate assets. The general purpose of these loans is for financing capital expenditures and current operations for commercial and industrial entities. These assets are short-term in nature. In the case of accounts receivable and inventories, the repayment of debt is reliant upon converting assets into cash or through goods and services being sold and collected. Collateral-based risk is due to aged short-term assets, which can be indicative of underlying issues with the borrower and lead to the value of the collateral being overstated.
Agriculture Agricultural loans are secured by non-real estate agricultural assets. These include shorter-term assets such as equipment, crops, and livestock. The risks associated with loans to finance crops or livestock include the borrower’s ability to successfully raise and market the commodity. Adverse weather conditions and other natural perils can dramatically affect farmers’ or ranchers’ production and ability to service debt. Volatile commodity prices present another significant risk for agriculture borrowers. Market price volatility and production cost volatility can affect both revenues and expenses.
Non-Depository Financial Institutions NDFI loans are secured by working capital assets and non-real estate assets. The general purpose of these loans is for financing capital expenditures and current operations. The repayment of debt is reliant upon converting assets into cash or through services being sold and collected. Collateral-based risk is due to aged short-term assets, which can be indicative of underlying issues with the borrower and lead to the value of the collateral being overstated. Other risks consist of collateral that is secured by the stock of a NDFI, which can be unlisted stock with a limited market for the stock, or volatility of asset values driven by market performance.
Overdrafts Commercial overdrafts are typically short-term and unsecured. Some commercial borrowers tie their overdraft obligation to their line of credit, so any draw on the line of credit will satisfy the overdraft.

95

 

Based on the factors noted above for each type of collateral, the Company assigns risk ratings to borrowers based on their most recently assessed financial position.
The following tables provide a summary of the amortized cost balance by collateral type and risk rating as of December 31, 2025 and 2024 (in thousands):
 

 

 

December 31, 2025

 

 

 

Amortized Cost Basis by Origination Year - Term Loans

 

 

 

 

 

 

 

 

 

 

Risk by Collateral

 

2025

 

 

2024

 

 

2023

 

 

2022

 

 

2021

 

 

Prior

 

 

Amortized Cost - Revolving Loans

 

 

Amortized Cost - Revolving Loans Converted to Term Loans

 

 

Total

 

Equipment/Accounts Receivable/Inventory

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

2,958,147

 

 

$

1,842,768

 

 

$

982,320

 

 

$

874,006

 

 

$

462,210

 

 

$

302,753

 

 

$

5,404,325

 

 

$

4,492

 

 

$

12,831,021

 

Special Mention

 

 

4,962

 

 

 

37,671

 

 

 

7,883

 

 

 

6,085

 

 

 

893

 

 

 

9,535

 

 

 

63,256

 

 

 

6,635

 

 

 

136,920

 

Substandard

 

 

21,647

 

 

 

17,207

 

 

 

49,292

 

 

 

49,139

 

 

 

8,090

 

 

 

9,473

 

 

 

168,348

 

 

 

1,059

 

 

 

324,255

 

Doubtful

 

 

4,273

 

 

 

4,121

 

 

 

100

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

513

 

 

 

—

 

 

 

9,007

 

Total Equipment/Accounts Receivable/Inventory

 

$

2,989,029

 

 

$

1,901,767

 

 

$

1,039,595

 

 

$

929,230

 

 

$

471,193

 

 

$

321,761

 

 

$

5,636,442

 

 

$

12,186

 

 

$

13,301,203

 

Agriculture

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

26,921

 

 

$

22,252

 

 

$

24,757

 

 

$

7,254

 

 

$

3,824

 

 

$

2,622

 

 

$

406,985

 

 

$

815

 

 

$

495,430

 

Special Mention

 

 

2,464

 

 

 

—

 

 

 

—

 

 

 

71

 

 

 

35

 

 

 

—

 

 

 

5,374

 

 

 

—

 

 

 

7,944

 

Substandard

 

 

1,000

 

 

 

333

 

 

 

223

 

 

 

502

 

 

 

—

 

 

 

558

 

 

 

14,370

 

 

 

—

 

 

 

16,986

 

Doubtful

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,443

 

 

 

1,443

 

Total Agriculture

 

$

30,385

 

 

$

22,585

 

 

$

24,980

 

 

$

7,827

 

 

$

3,859

 

 

$

3,180

 

 

$

426,729

 

 

$

2,258

 

 

$

521,803

 

NDFIs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

129,859

 

 

$

277,053

 

 

$

364,738

 

 

$

82,934

 

 

$

11,470

 

 

$

29,289

 

 

$

1,489,473

 

 

$

221

 

 

$

2,385,037

 

Special Mention

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2

 

 

 

—

 

 

 

27,810

 

 

 

50

 

 

 

27,862

 

Substandard

 

 

533

 

 

 

9,023

 

 

 

3,399

 

 

 

3,502

 

 

 

664

 

 

 

117

 

 

 

—

 

 

 

—

 

 

 

17,238

 

Doubtful

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total NDFIs

 

$

130,392

 

 

$

286,076

 

 

$

368,137

 

 

$

86,436

 

 

$

12,136

 

 

$

29,406

 

 

$

1,517,283

 

 

$

271

 

 

$

2,430,137

 

 

 

 

December 31, 2024

 

 

 

Amortized Cost Basis by Origination Year - Term Loans

 

 

 

 

 

 

 

 

 

 

Risk by Collateral

 

2024

 

 

2023

 

 

2022

 

 

2021

 

 

2020

 

 

Prior

 

 

Amortized Cost - Revolving Loans

 

 

Amortized Cost - Revolving Loans Converted to Term Loans

 

 

Total

 

Equipment/Accounts Receivable/Inventory

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

2,029,012

 

 

$

1,021,589

 

 

$

851,378

 

 

$

662,361

 

 

$

291,712

 

 

$

130,832

 

 

$

3,796,386

 

 

$

20,356

 

 

$

8,803,626

 

Special Mention

 

 

2,044

 

 

 

4,145

 

 

 

6,075

 

 

 

5,949

 

 

 

639

 

 

 

—

 

 

 

37,419

 

 

 

—

 

 

 

56,271

 

Substandard

 

 

23,044

 

 

 

20,101

 

 

 

58,659

 

 

 

14,444

 

 

 

822

 

 

 

4,240

 

 

 

141,289

 

 

 

—

 

 

 

262,599

 

Doubtful

 

 

195

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

195

 

Total Equipment/Accounts Receivable/Inventory

 

$

2,054,295

 

 

$

1,045,835

 

 

$

916,112

 

 

$

682,754

 

 

$

293,173

 

 

$

135,072

 

 

$

3,975,094

 

 

$

20,356

 

 

$

9,122,691

 

Agriculture

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

5,214

 

 

$

5,613

 

 

$

3,465

 

 

$

2,208

 

 

$

356

 

 

$

97

 

 

$

153,585

 

 

$

—

 

 

$

170,538

 

Special Mention

 

 

—

 

 

 

137

 

 

 

89

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,068

 

 

 

—

 

 

 

1,294

 

Substandard

 

 

4,643

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,893

 

 

 

—

 

 

 

6,536

 

Doubtful

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total Agriculture

 

$

9,857

 

 

$

5,750

 

 

$

3,554

 

 

$

2,208

 

 

$

356

 

 

$

97

 

 

$

156,546

 

 

$

—

 

 

$

178,368

 

NDFIs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

266,024

 

 

$

350,733

 

 

$

94,730

 

 

$

8,997

 

 

$

10,467

 

 

$

9,080

 

 

$

929,976

 

 

$

—

 

 

$

1,670,007

 

Special Mention

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

11,478

 

 

 

—

 

 

 

11,478

 

Substandard

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Doubtful

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total NDFIs

 

$

266,024

 

 

$

350,733

 

 

$

94,730

 

 

$

8,997

 

 

$

10,467

 

 

$

9,080

 

 

$

941,454

 

 

$

—

 

 

$

1,681,485

 

 
Specialty lending
A discussion of the credit quality indicators that impact each type of collateral securing Specialty loans is included below:

96

 

Asset-based lending General asset-based loans are secured by accounts receivable, inventory, equipment, and real estate. The purpose of these loans is for financing current operations for commercial customers. The repayment of debt is reliant upon collection of the accounts receivable within 30 to 90 days or converting assets into cash or through goods and services being sold and collected. The Company tracks each individual borrower credit risk based on their loan to collateral position. Any borrower position where the underlying value of collateral is below the fair value of the loan is considered out-of-margin and inherently higher risk.
The following table provides a summary of the amortized cost balance by risk rating for asset-based loans as of December 31, 2025 and 2024 (in thousands):
 

 

 

Asset-based lending

 

Risk

 

December 31, 2025

 

 

December 31, 2024

 

In-margin

 

$

518,237

 

 

$

469,194

 

Out-of-margin

 

 

—

 

 

 

—

 

Total

 

$

518,237

 

 

$

469,194

 

Commercial real estate
A discussion of the credit quality indicators that impact each type of collateral securing Commercial real estate loans is included below:
Owner-occupied Owner-occupied loans are secured by commercial real estate. These loans are often longer tenured and susceptible to multiple economic cycles. The loans rely on the owner-occupied operations to service debt which cover a broad spectrum of industries. Real estate debt can carry a significant amount of leverage for a borrower to maintain.
Non-owner-occupied Non-owner-occupied loans are secured by commercial real estate. These loans are often longer tenured and susceptible to multiple economic cycles. The key element of risk in this type of lending is the cyclical nature of real estate markets. Although national conditions affect the overall real estate industry, the effect of national conditions on local markets is equally important. Factors such as unemployment rates, consumer demand, household formation, and the level of economic activity can vary widely from state to state and among metropolitan areas. In addition to geographic considerations, markets can be defined by property type. While all sectors are influenced by economic conditions, some sectors are more sensitive to certain economic factors than others.
Farmland Farmland loans are secured by real estate used for agricultural purposes such as crop and livestock production. Assets used as collateral are long-term assets that carry the ability to have longer amortizations and maturities. Longer terms carry the risk of added susceptibility to market conditions. The limited purpose of some Agriculture-related collateral affects credit risk because such collateral may have limited or no other uses to support values when loan repayment problems emerge.
5+ Multi-family 5+ multi-family loans are secured by a multi-family residential property. The primary risks associated with this type of collateral are largely driven by economic conditions. The national and local market conditions can change with unemployment rates or competing supply of multi-family housing. Tenants may not be able to afford their housing or have better options and this can result in increased vacancy. Rents may need to be lowered to fill apartment units. Increased vacancy and lower rental rates not only drive the borrower’s ability to repay debt but also contribute to how the collateral is valued.
1-4 Family construction 1-4 family construction loans are secured by 1-4 family residential real estate and are in the process of construction or improvements being made. The predominant risk inherent to this portfolio is the risk associated with a borrower’s ability to successfully complete a project on time and within budget. Market conditions also play an important role in understanding the risk profile. Risk from adverse changes in market conditions from the start of development to completion can result in deflated collateral values.
General construction General construction loans are secured by commercial real estate in process of construction or improvements being made and their repayment is dependent on the collateral’s completion. Construction lending presents unique risks not encountered in term financing of existing real estate. The predominant risk inherent to this portfolio is the risk associated with a borrower’s ability to successfully complete a project on time and within budget. Commercial properties under construction are susceptible to market and economic conditions. Demand from prospective customers may erode after construction begins because of a general economic slowdown or an increase in the supply of competing properties.

97

 

Based on the factors noted above for each type of collateral, the Company assigns risk ratings to borrowers based on their most recently assessed financial position.
The following tables provide a summary of the amortized cost balance by collateral type and risk rating as of December 31, 2025 and 2024 (in thousands):
 

 

 

December 31, 2025

 

 

 

Amortized Cost Basis by Origination Year - Term Loans

 

 

 

 

 

 

 

 

 

 

Risk by Collateral

 

2025

 

 

2024

 

 

2023

 

 

2022

 

 

2021

 

 

Prior

 

 

Amortized Cost - Revolving Loans

 

 

Amortized Cost - Revolving Loans Converted to Term Loans

 

 

Total

 

Owner-occupied

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

1,135,389

 

 

$

489,616

 

 

$

529,515

 

 

$

904,187

 

 

$

751,944

 

 

$

681,592

 

 

$

39,385

 

 

$

—

 

 

$

4,531,628

 

Special Mention

 

 

4,148

 

 

 

37,092

 

 

 

19,605

 

 

 

30,991

 

 

 

11,892

 

 

 

27,290

 

 

 

120

 

 

 

—

 

 

 

131,138

 

Substandard

 

 

11,538

 

 

 

3,053

 

 

 

50,058

 

 

 

20,207

 

 

 

11,542

 

 

 

15,893

 

 

 

—

 

 

 

—

 

 

 

112,291

 

Doubtful

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total Owner-occupied

 

$

1,151,075

 

 

$

529,761

 

 

$

599,178

 

 

$

955,385

 

 

$

775,378

 

 

$

724,775

 

 

$

39,505

 

 

$

—

 

 

$

4,775,057

 

Non-owner-occupied

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

1,619,478

 

 

$

652,107

 

 

$

827,493

 

 

$

974,293

 

 

$

749,272

 

 

$

716,905

 

 

$

36,134

 

 

$

1,054

 

 

$

5,576,736

 

Special Mention

 

 

23,339

 

 

 

1,950

 

 

 

—

 

 

 

19,994

 

 

 

745

 

 

 

12,307

 

 

 

—

 

 

 

—

 

 

 

58,335

 

Substandard

 

 

21,468

 

 

 

1,974

 

 

 

7,013

 

 

 

17,856

 

 

 

19,599

 

 

 

7,290

 

 

 

4,959

 

 

 

—

 

 

 

80,159

 

Doubtful

 

 

—

 

 

 

—

 

 

 

12,952

 

 

 

6,688

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

19,640

 

Total Non-owner-occupied

 

$

1,664,285

 

 

$

656,031

 

 

$

847,458

 

 

$

1,018,831

 

 

$

769,616

 

 

$

736,502

 

 

$

41,093

 

 

$

1,054

 

 

$

5,734,870

 

Farmland

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

230,559

 

 

$

67,852

 

 

$

65,697

 

 

$

116,281

 

 

$

80,909

 

 

$

124,702

 

 

$

65,013

 

 

$

75

 

 

$

751,088

 

Special Mention

 

 

18,101

 

 

 

342

 

 

 

—

 

 

 

115

 

 

 

120

 

 

 

1,869

 

 

 

—

 

 

 

—

 

 

 

20,547

 

Substandard

 

 

10,136

 

 

 

6,348

 

 

 

20,117

 

 

 

14,613

 

 

 

2,584

 

 

 

36,747

 

 

 

1,390

 

 

 

—

 

 

 

91,935

 

Doubtful

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total Farmland

 

$

258,796

 

 

$

74,542

 

 

$

85,814

 

 

$

131,009

 

 

$

83,613

 

 

$

163,318

 

 

$

66,403

 

 

$

75

 

 

$

863,570

 

5+ Multi-family

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

329,902

 

 

$

179,107

 

 

$

157,535

 

 

$

543,003

 

 

$

426,213

 

 

$

96,282

 

 

$

10,441

 

 

$

—

 

 

$

1,742,483

 

Special Mention

 

 

—

 

 

 

—

 

 

 

238

 

 

 

2,891

 

 

 

8,447

 

 

 

193

 

 

 

—

 

 

 

—

 

 

 

11,769

 

Substandard

 

 

—

 

 

 

—

 

 

 

14,172

 

 

 

8,231

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

22,403

 

Doubtful

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total 5+ Multi-family

 

$

329,902

 

 

$

179,107

 

 

$

171,945

 

 

$

554,125

 

 

$

434,660

 

 

$

96,475

 

 

$

10,441

 

 

$

—

 

 

$

1,776,655

 

1-4 Family construction

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

74,900

 

 

$

11,104

 

 

$

—

 

 

$

520

 

 

$

—

 

 

$

—

 

 

$

1,301

 

 

$

—

 

 

$

87,825

 

Special Mention

 

 

949

 

 

 

460

 

 

 

240

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,649

 

Substandard

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Doubtful

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total 1-4 Family construction

 

$

75,849

 

 

$

11,564

 

 

$

240

 

 

$

520

 

 

$

—

 

 

$

—

 

 

$

1,301

 

 

$

—

 

 

$

89,474

 

General construction

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

1,078,840

 

 

$

865,015

 

 

$

684,507

 

 

$

333,717

 

 

$

23,062

 

 

$

14,951

 

 

$

25,085

 

 

$

—

 

 

$

3,025,177

 

Special Mention

 

 

14,579

 

 

 

3,100

 

 

 

128

 

 

 

18,919

 

 

 

1,903

 

 

 

29

 

 

 

—

 

 

 

—

 

 

 

38,658

 

Substandard

 

 

5,732

 

 

 

—

 

 

 

34,493

 

 

 

20,560

 

 

 

3,348

 

 

 

1,293

 

 

 

7,250

 

 

 

—

 

 

 

72,676

 

Doubtful

 

 

102

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

102

 

Total General construction

 

$

1,099,253

 

 

$

868,115

 

 

$

719,128

 

 

$

373,196

 

 

$

28,313

 

 

$

16,273

 

 

$

32,335

 

 

$

—

 

 

$

3,136,613

 

 

98

 

 

 

December 31, 2024

 

 

 

Amortized Cost Basis by Origination Year - Term Loans

 

 

 

 

 

 

 

 

 

 

Risk by Collateral

 

2024

 

 

2023

 

 

2022

 

 

2021

 

 

2020

 

 

Prior

 

 

Amortized Cost - Revolving Loans

 

 

Amortized Cost - Revolving Loans Converted to Term Loans

 

 

Total

 

Owner-occupied

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

316,858

 

 

$

276,546

 

 

$

590,337

 

 

$

442,768

 

 

$

289,219

 

 

$

267,944

 

 

$

4,948

 

 

$

25,266

 

 

$

2,213,886

 

Special Mention

 

 

31,213

 

 

 

—

 

 

 

1,512

 

 

 

—

 

 

 

467

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

33,192

 

Substandard

 

 

4,446

 

 

 

503

 

 

 

1,631

 

 

 

37

 

 

 

4,113

 

 

 

7,263

 

 

 

—

 

 

 

—

 

 

 

17,993

 

Doubtful

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total Owner-occupied

 

$

352,517

 

 

$

277,049

 

 

$

593,480

 

 

$

442,805

 

 

$

293,799

 

 

$

275,207

 

 

$

4,948

 

 

$

25,266

 

 

$

2,265,071

 

Non-owner-occupied

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

784,434

 

 

$

514,745

 

 

$

981,769

 

 

$

727,365

 

 

$

404,362

 

 

$

324,310

 

 

$

32,312

 

 

$

—

 

 

$

3,769,297

 

Special Mention

 

 

—

 

 

 

13,028

 

 

 

25,000

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

38,028

 

Substandard

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

529

 

 

 

—

 

 

 

—

 

 

 

529

 

Doubtful

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total Non-owner-occupied

 

$

784,434

 

 

$

527,773

 

 

$

1,006,769

 

 

$

727,365

 

 

$

404,362

 

 

$

324,839

 

 

$

32,312

 

 

$

—

 

 

$

3,807,854

 

Farmland

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

36,771

 

 

$

45,055

 

 

$

45,131

 

 

$

36,127

 

 

$

182,769

 

 

$

14,209

 

 

$

106,468

 

 

$

3

 

 

$

466,533

 

Special Mention

 

 

982

 

 

 

—

 

 

 

13,023

 

 

 

—

 

 

 

—

 

 

 

2,324

 

 

 

1,000

 

 

 

—

 

 

 

17,329

 

Substandard

 

 

16,903

 

 

 

2,302

 

 

 

—

 

 

 

—

 

 

 

993

 

 

 

6,483

 

 

 

—

 

 

 

—

 

 

 

26,681

 

Doubtful

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total Farmland

 

$

54,656

 

 

$

47,357

 

 

$

58,154

 

 

$

36,127

 

 

$

183,762

 

 

$

23,016

 

 

$

107,468

 

 

$

3

 

 

$

510,543

 

5+ Multi-family

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

161,767

 

 

$

47,136

 

 

$

302,225

 

 

$

256,032

 

 

$

28,819

 

 

$

18,732

 

 

$

9,202

 

 

$

—

 

 

$

823,913

 

Special Mention

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Substandard

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Doubtful

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total 5+ Multi-family

 

$

161,767

 

 

$

47,136

 

 

$

302,225

 

 

$

256,032

 

 

$

28,819

 

 

$

18,732

 

 

$

9,202

 

 

$

—

 

 

$

823,913

 

1-4 Family construction

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

46,096

 

 

$

1,385

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

5

 

 

$

—

 

 

$

47,486

 

Special Mention

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Substandard

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Doubtful

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total 1-4 Family construction

 

$

46,096

 

 

$

1,385

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

5

 

 

$

—

 

 

$

47,486

 

General construction

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pass

 

$

493,614

 

 

$

643,050

 

 

$

1,221,251

 

 

$

235,758

 

 

$

4,049

 

 

$

504

 

 

$

74,950

 

 

$

—

 

 

$

2,673,176

 

Special Mention

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Substandard

 

 

—

 

 

 

1,835

 

 

 

1,288

 

 

 

—

 

 

 

—

 

 

 

10

 

 

 

—

 

 

 

—

 

 

 

3,133

 

Doubtful

 

 

109

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

109

 

Total General construction

 

$

493,723

 

 

$

644,885

 

 

$

1,222,539

 

 

$

235,758

 

 

$

4,049

 

 

$

514

 

 

$

74,950

 

 

$

—

 

 

$

2,676,418

 

Consumer real estate
A discussion of the credit quality indicators that impact each type of collateral securing Consumer real estate loans is included below:
HELOC HELOC loans are revolving lines of credit secured by 1-4 family residential property. The primary risk is the borrower’s inability to repay debt. Revolving notes are often associated with HELOCs that can be secured by real estate without a 1st lien priority. Collateral is susceptible to market volatility impacting home values or economic downturns.
First lien: 1-4 family First lien 1-4 family loans are secured by a first lien on 1-4 family residential property. These term loans carry longer maturities and amortizations. The longer tenure exposes the borrower to multiple economic cycles, coupled with longer amortizations that result in smaller principal reduction early in the life of the loan. Collateral is susceptible to market volatility impacting home values.
Junior lien: 1-4 family Junior lien 1-4 family loans are secured by a junior lien on 1-4 family residential property. The Company’s primary risk is the borrower’s inability to repay debt and not being in a first lien position. Collateral is susceptible to market volatility impacting home values or economic downturns.
A borrower is considered non-performing if the Company has ceased the recognition of interest and the loan is placed on non-accrual. Charge-offs and borrower performance are tracked on a loan origination vintage basis. Certain vintages, based on their maturation cycle, could be at higher risk due to collateral-based risk factors.

99

 

The following tables provide a summary of the amortized cost balance by collateral type and risk rating as of December 31, 2025 and 2024 (in thousands):
 

 

 

December 31, 2025

 

 

 

Amortized Cost Basis by Origination Year - Term Loans

 

 

 

 

 

 

 

 

 

 

Risk by Collateral

 

2025

 

 

2024

 

 

2023

 

 

2022

 

 

2021

 

 

Prior

 

 

Amortized Cost - Revolving Loans

 

 

Amortized Cost - Revolving Loans Converted to Term Loans

 

 

Total

 

HELOC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

2,736

 

 

$

87

 

 

$

407

 

 

$

1,343

 

 

$

324

 

 

$

5,979

 

 

$

697,853

 

 

$

4,358

 

 

$

713,087

 

Non-performing

 

 

12

 

 

 

312

 

 

 

349

 

 

 

732

 

 

 

253

 

 

 

1,805

 

 

 

650

 

 

 

973

 

 

 

5,086

 

Total HELOC

 

$

2,748

 

 

$

399

 

 

$

756

 

 

$

2,075

 

 

$

577

 

 

$

7,784

 

 

$

698,503

 

 

$

5,331

 

 

$

718,173

 

First lien: 1-4 family

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

608,545

 

 

$

367,915

 

 

$

359,419

 

 

$

624,670

 

 

$

732,306

 

 

$

824,314

 

 

$

6,864

 

 

$

13

 

 

$

3,524,046

 

Non-performing

 

 

44,788

 

 

 

241

 

 

 

4,986

 

 

 

6,885

 

 

 

3,445

 

 

 

6,256

 

 

 

—

 

 

 

—

 

 

 

66,601

 

Total First lien: 1-4 family

 

$

653,333

 

 

$

368,156

 

 

$

364,405

 

 

$

631,555

 

 

$

735,751

 

 

$

830,570

 

 

$

6,864

 

 

$

13

 

 

$

3,590,647

 

Junior lien: 1-4 family

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

20,419

 

 

$

30,975

 

 

$

19,202

 

 

$

28,417

 

 

$

17,324

 

 

$

5,974

 

 

$

4,766

 

 

$

—

 

 

$

127,077

 

Non-performing

 

 

39

 

 

 

246

 

 

 

10

 

 

 

121

 

 

 

81

 

 

 

74

 

 

 

—

 

 

 

—

 

 

 

571

 

Total Junior lien: 1-4 family

 

$

20,458

 

 

$

31,221

 

 

$

19,212

 

 

$

28,538

 

 

$

17,405

 

 

$

6,048

 

 

$

4,766

 

 

$

—

 

 

$

127,648

 

 

 

 

December 31, 2024

 

 

 

Amortized Cost Basis by Origination Year - Term Loans

 

 

 

 

 

 

 

 

 

 

Risk by Collateral

 

2024

 

 

2023

 

 

2022

 

 

2021

 

 

2020

 

 

Prior

 

 

Amortized Cost - Revolving Loans

 

 

Amortized Cost - Revolving Loans Converted to Term Loans

 

 

Total

 

HELOC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

90

 

 

$

16

 

 

$

450

 

 

$

203

 

 

$

249

 

 

$

3,780

 

 

$

390,843

 

 

$

1,879

 

 

$

397,510

 

Non-performing

 

 

—

 

 

 

—

 

 

 

—

 

 

 

252

 

 

 

85

 

 

 

1,269

 

 

 

—

 

 

 

605

 

 

 

2,211

 

Total HELOC

 

$

90

 

 

$

16

 

 

$

450

 

 

$

455

 

 

$

334

 

 

$

5,049

 

 

$

390,843

 

 

$

2,484

 

 

$

399,721

 

First lien: 1-4 family

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

413,060

 

 

$

358,303

 

 

$

559,689

 

 

$

633,749

 

 

$

496,615

 

 

$

272,601

 

 

$

—

 

 

$

—

 

 

$

2,734,017

 

Non-performing

 

 

335

 

 

 

2,939

 

 

 

5,328

 

 

 

1,468

 

 

 

143

 

 

 

1,027

 

 

 

—

 

 

 

—

 

 

 

11,240

 

Total First lien: 1-4 family

 

$

413,395

 

 

$

361,242

 

 

$

565,017

 

 

$

635,217

 

 

$

496,758

 

 

$

273,628

 

 

$

—

 

 

$

—

 

 

$

2,745,257

 

Junior lien: 1-4 family

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

12,516

 

 

$

9,952

 

 

$

9,903

 

 

$

3,978

 

 

$

2,934

 

 

$

2,631

 

 

$

75

 

 

$

—

 

 

$

41,989

 

Non-performing

 

 

—

 

 

 

17

 

 

 

101

 

 

 

—

 

 

 

—

 

 

 

45

 

 

 

—

 

 

 

—

 

 

 

163

 

Total Junior lien: 1-4 family

 

$

12,516

 

 

$

9,969

 

 

$

10,004

 

 

$

3,978

 

 

$

2,934

 

 

$

2,676

 

 

$

75

 

 

$

—

 

 

$

42,152

 

Consumer
A discussion of the credit quality indicators that impact each type of collateral securing Consumer loans is included below:
Revolving line Consumer Revolving lines of credit are secured by consumer assets other than real estate. The primary risk associated with this collateral is related to market volatility and the value of the underlying financial assets.
Auto Direct consumer auto loans are secured by new and used consumer vehicles. The primary risk with this collateral class is the rate at which the collateral depreciates.
Other This category includes Other consumer loans made to an individual. The primary risk for this category is for those loans where the loan is unsecured. This collateral type also includes other unsecured lending such as consumer overdrafts.
A borrower is considered non-performing if the Company has ceased the recognition of interest and the loan is placed on non-accrual. Charge-offs and borrower performance are tracked on a loan origination vintage basis. Certain vintages, based on their maturation cycle, could be at higher risk due to collateral-based risk factors.

100

 

The following tables provide a summary of the amortized cost balance by collateral type and risk rating as of December 31, 2025 and 2024 (in thousands):
 

 

 

December 31, 2025

 

 

 

Amortized Cost Basis by Origination Year - Term Loans

 

 

 

 

 

 

 

 

 

 

Risk by Collateral

 

2025

 

 

2024

 

 

2023

 

 

2022

 

 

2021

 

 

Prior

 

 

Amortized Cost - Revolving Loans

 

 

Amortized Cost - Revolving Loans Converted to Term Loans

 

 

Total

 

Revolving line

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

1,485

 

 

$

34

 

 

$

23

 

 

$

47

 

 

$

24

 

 

$

525

 

 

$

159,834

 

 

$

99

 

 

$

162,071

 

Non-performing

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2

 

 

 

—

 

 

 

1

 

 

 

620

 

 

 

3

 

 

 

626

 

Total Revolving line

 

$

1,485

 

 

$

34

 

 

$

23

 

 

$

49

 

 

$

24

 

 

$

526

 

 

$

160,454

 

 

$

102

 

 

$

162,697

 

Auto

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

8,179

 

 

$

7,292

 

 

$

9,725

 

 

$

5,290

 

 

$

1,109

 

 

$

248

 

 

$

—

 

 

$

—

 

 

$

31,843

 

Non-performing

 

 

—

 

 

 

—

 

 

 

18

 

 

 

17

 

 

 

9

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

44

 

Total Auto

 

$

8,179

 

 

$

7,292

 

 

$

9,743

 

 

$

5,307

 

 

$

1,118

 

 

$

248

 

 

$

—

 

 

$

—

 

 

$

31,887

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

12,905

 

 

$

11,161

 

 

$

3,514

 

 

$

5,893

 

 

$

849

 

 

$

1,245

 

 

$

8,567

 

 

$

—

 

 

$

44,134

 

Non-performing

 

 

2

 

 

 

36

 

 

 

—

 

 

 

24

 

 

 

4

 

 

 

27

 

 

 

—

 

 

 

—

 

 

 

93

 

Total Other

 

$

12,907

 

 

$

11,197

 

 

$

3,514

 

 

$

5,917

 

 

$

853

 

 

$

1,272

 

 

$

8,567

 

 

$

—

 

 

$

44,227

 

 

 

 

December 31, 2024

 

 

 

Amortized Cost Basis by Origination Year - Term Loans

 

 

 

 

 

 

 

 

 

 

Risk by Collateral

 

2024

 

 

2023

 

 

2022

 

 

2021

 

 

2020

 

 

Prior

 

 

Amortized Cost - Revolving Loans

 

 

Amortized Cost - Revolving Loans Converted to Term Loans

 

 

Total

 

Revolving line

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

35

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

101,407

 

 

$

—

 

 

$

101,442

 

Non-performing

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total Revolving line

 

$

35

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

101,407

 

 

$

—

 

 

$

101,442

 

Auto

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

8,567

 

 

$

7,418

 

 

$

3,534

 

 

$

1,920

 

 

$

673

 

 

$

283

 

 

$

—

 

 

$

—

 

 

$

22,395

 

Non-performing

 

 

—

 

 

 

11

 

 

 

—

 

 

 

8

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

19

 

Total Auto

 

$

8,567

 

 

$

7,429

 

 

$

3,534

 

 

$

1,928

 

 

$

673

 

 

$

283

 

 

$

—

 

 

$

—

 

 

$

22,414

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

13,037

 

 

$

2,876

 

 

$

10,057

 

 

$

25,659

 

 

$

342

 

 

$

796

 

 

$

17,216

 

 

$

—

 

 

$

69,983

 

Non-performing

 

 

13

 

 

 

—

 

 

 

8

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

21

 

Total Other

 

$

13,050

 

 

$

2,876

 

 

$

10,065

 

 

$

25,659

 

 

$

342

 

 

$

796

 

 

$

17,216

 

 

$

—

 

 

$

70,004

 

Credit cards
A discussion of the credit quality indicators that impact Credit card loans is included below:
Consumer Consumer credit card loans are revolving loans made to individuals. The primary risk associated with this collateral class is credit card debt which is generally unsecured; therefore, repayment depends primarily on a borrower’s willingness and capacity to repay. The highly competitive environment for credit card lending provides consumers with ample opportunity to hold several credit cards from different issuers and to pay only minimum monthly payments on outstanding balances. In such an environment, borrowers may become over-extended and unable to repay, particularly in times of an economic downturn or a personal catastrophic event.
The consumer credit card portfolio is segmented by borrower payment activity. Transactors are defined as accounts that pay off their balance by the end of each statement cycle. Revolvers are defined as an account that carries a balance from one statement cycle to the next. These accounts incur monthly finance charges, and, sometimes, late fees. Revolvers are inherently higher risk and are tracked by credit score.
 
As of December 31, 2025 , a co-branded credit card portfolio is also segmented between current and significantly delinquent loans, with accounts being considered significantly delinquent after 60 days . Current loans are segmented by borrower payment activity as described above. Significantly delinquent loans are tracked by the number of cycles past due.
Commercial Commercial credit card loans are revolving loans made to small and commercial businesses. The primary risk associated with this collateral class is credit card debt which is generally unsecured; therefore,

101

 

repayment depends primarily on a borrower’s willingness and capacity to repay. Borrowers may become over-extended and unable to repay, particularly in times of an economic downturn or a catastrophic event.
The commercial credit card portfolio is segmented by current and past due payment status. A borrower is past due after 30 days. In general, commercial credit card customers do not have incentive to hold a balance resulting in paying interest on credit card debt as commercial customers will typically have other debt obligations with lower interest rates in which they can utilize for capital.
The following table provides a summary of the amortized cost balance of consumer credit cards by risk rating as of December 31, 2025 and 2024 (in thousands):
 

 

 

Consumer

 

Risk

 

December 31, 2025

 

 

December 31, 2024

 

Transactor accounts

 

$

123,445

 

 

$

101,688

 

Revolver accounts (by Credit score):

 

 

 

 

 

 

Less than 600

 

 

13,123

 

 

 

16,297

 

600-619

 

 

7,127

 

 

 

7,893

 

620-639

 

 

12,243

 

 

 

13,174

 

640-659

 

 

19,679

 

 

 

20,798

 

660-679

 

 

20,261

 

 

 

20,897

 

680-699

 

 

22,814

 

 

 

24,121

 

700-719

 

 

25,385

 

 

 

26,180

 

720-739

 

 

22,547

 

 

 

22,418

 

740-759

 

 

19,838

 

 

 

18,965

 

760-779

 

 

19,864

 

 

 

19,609

 

780-799

 

 

18,774

 

 

 

18,058

 

800-819

 

 

11,782

 

 

 

11,443

 

820-839

 

 

6,151

 

 

 

5,745

 

840+

 

 

1,213

 

 

 

1,188

 

Total

 

$

344,246

 

 

$

328,474

 

 
The following table provides a summary of the amortized cost balance of consumer credit cards considered significantly delinquent for a co-branded portfolio by delinquent cycles as of December 31, 2025 (in thousands):
 

 

 

Consumer

 

Risk

 

December 31, 2025

 

61-90 Days

 

$

1,084

 

91-120 Days

 

 

848

 

121-150 Days

 

 

805

 

151-180 Days

 

 

766

 

Total

 

$

3,503

 

 
The following table provides a summary of the amortized cost balance of commercial credit cards by risk rating as of December 31, 2025 and 2024 (in thousands):
 

 

 

Commercial

 

Risk

 

December 31, 2025

 

 

December 31, 2024

 

Current

 

$

330,585

 

 

$

231,713

 

Past Due

 

 

22,399

 

 

 

18,579

 

Total

 

$

352,984

 

 

$

250,292

 

Leases and other
A discussion of the credit quality indicators that impact each type of collateral securing Leases and other loans is included below:

102

 

Leases Leases are either loans to individuals for household, family and other personal expenditures or are loans related to all other direct financing and leveraged leases on property for leasing to lessees other than for household, family and other personal expenditure purposes. All leases are secured by the lease between the lessor and the lessee. These assignments grant the creditor a security interest in the rent stream from any lease, an important source of cash to pay the note in case of the borrower’s default.
Other Other loans are loans that are obligations of states and political subdivisions in the U.S., loans for purchasing or carrying securities, or all other non-consumer loans. Risk associated with other loans is tied to the underlying collateral by each type of loan. Collateral is generally equipment, accounts receivable, inventory, 1-4 family residential construction and is susceptible to the same risks mentioned with those collateral types previously.
Based on the factors noted above for each type of collateral, the Company assigns risk ratings to borrowers based on their most recently assessed financial position.
The following table provides a summary of the amortized cost balance by collateral type and risk rating as of December 31, 2025 and 2024 (in thousands):
 

 

 

Leases

 

 

Other

 

Risk

 

December 31, 2025

 

 

December 31, 2024

 

 

December 31, 2025

 

 

December 31, 2024

 

Pass

 

$

1,214

 

 

$

1,492

 

 

$

237,186

 

 

$

86,778

 

Special Mention

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Substandard

 

 

—

 

 

 

—

 

 

 

—

 

 

 

25

 

Doubtful

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total

 

$

1,214

 

 

$

1,492

 

 

$

237,186

 

 

$

86,803

 

Allowance for Credit Losses
The ACL is a valuation account that is deducted from loans’ and HTM securities’ amortized cost bases to present the net amount expected to be collected on the instrument. Loans and HTM securities are charged off against the ACL when management believes the balance has become uncollectible. Expected recoveries are included in the allowance and do not exceed the aggregate of amounts previously charged-off and expected to be charged-off.
 
Management estimates the allowance balance using relevant available information, from internal and external sources, related to past events, current conditions, and reasonable and supportable economic forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses and is tracked over an economic cycle to capture a ‘through the cycle’ loss history. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in portfolio industry-based segmentation, risk rating and credit score changes, average prepayment rates, changes in environmental conditions, or other relevant factors. For economic forecasts, the Company uses the Moody’s baseline scenario. The Company has developed a dynamic reasonable and supportable forecast period that ranges from one to three years and changes based on economic conditions. The Company’s reasonable and supportable forecast period is one year . After the reasonable and supportable forecast period, the Company reverts to historical losses. The reversion method applied to each portfolio can either be cliff in which the Company reverts immediately to historical losses or straight-line over four quarters.

The ACL is measured on a collective (pool) basis when similar risk characteristics exist. The ACL also incorporates qualitative factors which represent adjustments to historical credit loss experience for items such as concentrations of credit and results of internal loan review. The Company has identified the following portfolio segments and measures the allowance for credit losses using the following methods. The Company’s portfolio segmentation consists of Commercial and industrial, Specialty lending, Commercial real estate, Consumer real estate, Consumer, Credit cards, Leases and other, and Held-to-maturity securities. Multiple modeling techniques are used to measure credit losses based on the portfolio.
 
The ACL for Commercial and industrial and Leases and other segments are measured using a probability of default and loss given default method. Primary risk drivers within the segment are risk ratings of the individual loans along with changes of macro-economic variables. The economic variables utilized are typically comprised of leading and lagging indicators. The ACL for Commercial and industrial loans is calculated by modeling probability of default (PD) over future periods multiplied by historical loss given default rates (LGD) multiplied by contractual exposure at default minus any estimated prepayments and charge offs.

103

 

 
Collateral positions for Specialty lending loans are continuously monitored by the Company and the borrower is required to continually adjust the amount of collateral securing the loan. Credit losses are measured for any position where the amortized cost basis is greater than the fair value of the collateral. The ACL for specialty lending loans is calculated by using a bottom-up approach comparing collateral values to outstanding balances.
 
The ACL for the Commercial real estate segment is measured using a PD and LGD method. Primary risk characteristics within the segment are risk ratings of the individual loans, along with changes of macro-economic variables, such as interest rates, CRE price index, median household income, construction activity, farm income, and vacancy rates. The ACL for Commercial real estate loans is calculated by modeling PD over future periods based on peer bank data. The PD loss rate is then multiplied by historical LGD multiplied by contractual exposure at default minus any estimated prepayments and charge offs.
 
The ACL for the Consumer real estate and Consumer segments are measured using an origination vintage loss rate method applied to the loans’ amortized cost balance. The primary risk driver within the segments is year of origination along with changes of macro-economic variables such as unemployment and the home price index.
 
The Credit card segment contains both consumer and commercial credit cards. The ACL for Consumer credit cards is measured using a PD and LGD method for Revolvers and average historical loss rates across a defined lookback period for Transactors. The PD and LGD method used for Revolvers is similar in nature to the method used in the Commercial and industrial and Commercial real estate segments. Primary risk drivers within the segment are credit ratings of the individual card holders along with changes of macro-economic variables such as unemployment and retail sales. The ACL for Commercial credit cards is measured using roll-rate loss rate method based on days past due.
 
The ACL for the State and political HTM securities segment is measured using a loss rate method based on historical bond rating transitions. Primary risk drivers within the segment are bond ratings in the portfolio along with changes of macro-economic conditions. There is no ACL for the U.S. Treasury, U.S. Agency, and GSE mortgage-backed HTM securities portfolios as they are considered to be agency-backed securities with no risk of loss as they are either explicitly or implicitly guaranteed by the U.S. government. For further discussion on these securities, including the aging and amortized cost balance of HTM securities, see Note 4, “Securities.”
 
See the credit quality indicators presented previously for a summary of current risk in the Company’s portfolio. Changes in economic forecasts will affect all portfolio segments, updated financial records from borrowers will affect portfolio segments by risk rating, updated credit scores will affect consumer credit cards, payment performance will affect consumer and commercial credit card portfolio segments, and updated bond credit ratings will affect held-to-maturity securities. The Company actively monitors all credit quality indicators for risk changes that will influence the current estimate.
 
Expected credit losses are estimated over the contractual term of the loans, adjusted for prepayments when appropriate. The contractual term excludes expected extensions, renewals, and modifications unless either of the following applies: management has a reasonable expectation at the reporting date that a concessionary loan term has been granted to a borrower experiencing financial difficulty or the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancelable by the Company.
 
Credit card receivables do not have stated maturities. In determining the estimated life of a credit card receivable, management first estimates the future cash flows expected to be received and then applies those expected future cash flows to the credit card balance. Expected credit losses for credit cards are determined by estimating the amount and timing of principal payments expected to be received as payment for the balance outstanding as of the reporting period until the expected payments have been fully allocated. The ACL is recorded for the excess of the balance outstanding as of the reporting period over the expected principal payments.
 
Loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually include loans on nonaccrual, loans that include modifications deemed concessionary made to borrowers experiencing financial difficulty, or any loans specifically identified, and are excluded from the collective evaluation. When it is determined that payment of interest or recovery of all principal is questionable, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for undiscounted selling costs as appropriate. All loans are classified as collateral dependent if placed on non-accrual or include modifications made to borrowers experiencing financial difficulty.

104

 

ALLOWANCE FOR CREDIT LOSSES AND RECORDED INVESTMENT IN LOANS
The following tables provide a rollforward of the allowance for credit losses by portfolio segment for the year ended December 31, 2025, 2024, and 2023 (in thousands):
 

 

 

Year Ended December 31, 2025

 

 

 

Commercial and industrial

 

 

Specialty lending

 

 

Commercial real estate

 

 

Consumer real estate

 

 

Consumer

 

 

Credit cards

 

 

Leases and other

 

 

Total - Loans

 

 

HTM

 

 

Total

 

Allowance for credit losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

161,553

 

 

$

—

 

 

$

77,340

 

 

$

4,327

 

 

$

966

 

 

$

14,272

 

 

$

631

 

 

$

259,089

 

 

$

2,645

 

 

$

261,734

 

PCD allowance for credit loss at acquisition

 

 

45,026

 

 

 

—

 

 

 

40,054

 

 

 

206

 

 

 

13

 

 

 

—

 

 

 

—

 

 

 

85,299

 

 

 

—

 

 

 

85,299

 

Charge-offs

 

 

( 44,645

)

 

 

—

 

 

 

( 11,792

)

 

 

( 2,041

)

 

 

( 3,538

)

 

 

( 25,676

)

 

 

( 27

)

 

 

( 87,719

)

 

 

—

 

 

 

( 87,719

)

Recoveries

 

 

507

 

 

 

—

 

 

 

196

 

 

 

275

 

 

 

845

 

 

 

3,519

 

 

 

6

 

 

 

5,348

 

 

 

—

 

 

 

5,348

 

Provision

 

 

77,883

 

 

 

—

 

 

 

45,262

 

 

 

4,171

 

 

 

3,101

 

 

 

25,927

 

 

 

1,117

 

 

 

157,461

 

 

 

( 961

)

 

 

156,500

 

Ending balance - ACL

 

$

240,324

 

 

$

—

 

 

$

151,060

 

 

$

6,938

 

 

$

1,387

 

 

$

18,042

 

 

$

1,727

 

 

$

419,478

 

 

$

1,684

 

 

$

421,162